The Securities and Exchange Commission on Monday said it charged 11 individuals over their roles in the creation and promotion of a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from retail investors. The agency alleged that Forsage.io, a website that allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains, has operated as a pyramid scheme for over two years, with investors making money by enrolling others into the scheme. According to the SEC’s complaint, the platform allegedly used assets from new investors to pay earlier investors.
According to Forsage’s website, it is a “decentralized networking platform based on smart contracts.” It is the SEC’s latest move in tackling alleged crypto-related frauds, after the agency in May nearly doubled the size of its newly renamed Crypto Assets and Cyber Unit. Forsage.io was launched by Vladimir Okhotnikov, Jane Doe also known as Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov in January 2020, while the founders were last known to be living in Russia, the Republic of Georgia, and Indonesia, according to the SEC. In addition to the founders, the SEC also charged three U.S.-based promoters endorsing Forsage on their websites and social media platforms, and several members of the so-called Crypto Crusaders — the largest promotional group for the platform that operated in the United States. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains,” Carolyn Welshhans, acting chief of the SEC’s crypto assets and cyber unit, wrote in a statement Monday.