Breaking: SEC Charges 11 In Huge Crypto Pyramid Scheme Worth $300 Million

Anvesh Reddy
August 1, 2022
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SEC crypto pyramid scheme

The U.S. Securities and Exchange Commission had on Monday charged 11 individuals for running a huge global crypto fraud. The accused were involved in creating and promoting a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million. The money was raised from millions of retail investors worldwide, including in the United States, the SEC said.

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SEC Crypto Pyramid Scheme Affected Millions Worldwide

Those charged include the four founders of Forsage, the name of the scheme. According to the SEC complaint, the accused had in January 2020 launched Forsage.io, a website that was the center of the fraud. It allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains.

“Forsage allegedly has operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme. Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure.”

This is the second such crypto related fraud that SEC reported its action on. Last month, the commission charged three individuals in the first ever crypto insider trading scheme in the country. It found that a former Coinbase employee allegedly committed fraud by leaking multiple announcements before they were public.

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Pyramid Scheme Launched On Massive Scale

Carolyn Welshhans, acting chief of the SEC’s crypto assets and cyber unit, said the SEC got around the scheme despite its focus on smart contracts.

“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors. Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”

The crypto scheme, as per the complaint, operated as a pyramid scheme for over two years. The perpetrators allegedly used assets from new investors to pay earlier investors. The SEC charged the 11 individuals with violating the registration and anti-fraud provisions of the federal securities laws.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Anvesh reports major crypto updates around U.S. regulation and market moving trends. Published over 1400 articles so far on crypto and blockchain. A proud dropout of University of Massachusetts, Lowell. Can be reached at [email protected] or x.com/BitcoinReddy or linkedin.com/in/anveshreddybtc/
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.