- The founders of the $300 million scam Forsage have been charged by the SEC for running the Ponzi scheme
- Forsage has been operating for over two years, taking advantage of the COVID crisis
- Many U.S.-based promoters have been charged for their roles in the scam
The founders of Forsage, a long-running crypto scam that has taken some $300 million from millions of retail investors worldwide, have been charged by the Securities and Exchange Commission (SEC) for their roles in creating and promoting the operation. The Ponzi scheme, which was initially active on the Ethereum platform but also spread to Tron and Binance Chain, has operators spread all over the world, which will make it hard for the SEC to achieve its aims in bringing all of the individuals involved to justice.
Forsage Took Advantage of COVID Crisis
Forsage launched as an Ethereum dApp in February 2020, but it was quickly pegged as a scam, using Coronavirus fears and layoffs to attract more members by advertising it as a means of earning extra money while the economy was suffering and jobs were being lost.
The Forsage website, which is still up and operating, describes it as a “Decentralized networking platform based on smart contracts that connects people from all over the world and opens the limitless possibilities of the new economic financial system.” However, the SEC has a different view of it:
…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.
U.S.-based Promoters Targeted
Forsage has grown in the last two years to have dApps on the Tron and Binance Chain blockchains, allowing it to bring in more money. The founders ignored cease-and-desist actions in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, leading to the SEC taking action now.
Among the 11 charged are four founders of Forsage, who were last known to be living in Russia, the Republic of Georgia, and Indonesia, as well as three U.S.-based promoters and several members of the so-called Crypto Crusaders—the largest promotional group for the scheme in the U.S.
Of the others, two U.S.-based promoters have settled with the SEC after being accused of violating the registration and anti-fraud provisions of the federal securities laws, but there are still several who look like they will face trial over their parts in the Forsage scam.