The United States Securities and Exchange
Commission (SEC) has charged 11 individuals before the United States
District Court in the Northern District of Illinois for alleged fraud.
Four of these 11 individuals were the co-founders
of Forsage, a project the SEC described as a “fraudulent crypto pyramid and
ponzi scheme”.
SEC noted that the 11 individuals raised over
$300 million from retail investors from around the world through the scheme.
The US securities market regulator disclosed these on Monday in a press
statement published on its
website.
Carolyn Welshhans, Acting Chief of the SEC’s
Crypto Assets and Cyber Unit, noted that Forsage was “launched on a massive
scale”.
Welshhans added that the scheme was “aggressively marketed to investors.”
The SEC also noted that the four founders of the
scheme were last known to be residing in Russia, the Republic of Georgia, and
Indonesia.
The watchdog further disclosed that three of the
charged 11 individuals were promoters based in the United States.
These promoters were paid by the founders to
give endorsement to “the fraudulent blockchain scheme” on its website and
social media platforms.
Other persons charged were members of a promotional group called Crypto
Crusade, the SEC said.
This self-styled Crypto Crusade operated
from at least five different states in the US, SEC explained.
The watchdog added that the platform was the biggest promotional
group for the pyramid scheme.
The Background
According to the SEC, in January 2020, the four
founders, Vladimir Okhotnikov, Jane Doe or Lola Ferrari, Mikhail Sergeev, and
Sergey Maslakov, inaugurated Forsage.
Forsage.io functioned as a website that enabled
millions of retail investors to initiate transactions using smart contracts run
on Blockchains such as Ethereum and Binance.
SEC also alleged that Forsage for over two years
ran a pyramid scheme that paid members for recruiting others into the
circle.
According to the press statement, the Philippine
SEC issued a cease-and-desist to Forsage in September 2020
The Montana Commissioner of Securities and
Insurance also issued another in March 2021, both to deaf ears, the SEC said.
Instead, the watchdog pointed, Forsage remained floated even as its founders kept denying the claims through multiple YouTube videos.
“Fraudsters cannot circumvent the federal
securities laws by focusing their schemes on smart contracts and blockchains,”
Welshhans said.
The SEC asked that the court grant “injunctive
relief, disgorgement, and civil penalties” against Forsagei.o
Other than the four founders, the SEC said it charged the following persons with violation of the registration and anti-fraud provisions of the federal securities laws: Cheri Bowon (Missipi), Ronald Deering (Idaho), Samuel Ellis
(Louisville), and Mark Hamlin (Henricho).
Others are Carlos Martinez (Chicago), Alisa
Shepherd (Florida), Sarah Theissen (Wisconsin) and Sarah Theissen (Winconsin).
The SEC explained, “Without admitting or denying
the allegations, two of the defendants, Ellis and Theissen, agreed to settle
the charges and to be permanently enjoined from future violations of the
charged provisions and certain other activity.
“Additionally, Ellis agreed to pay disgorgement
and civil penalties, and Theissen will be required to pay disgorgement and
civil penalties as determined by the court. Both settlements are subject to
court approval.”
The United States Securities and Exchange
Commission (SEC) has charged 11 individuals before the United States
District Court in the Northern District of Illinois for alleged fraud.
Four of these 11 individuals were the co-founders
of Forsage, a project the SEC described as a “fraudulent crypto pyramid and
ponzi scheme”.
SEC noted that the 11 individuals raised over
$300 million from retail investors from around the world through the scheme.
The US securities market regulator disclosed these on Monday in a press
statement published on its
website.
Carolyn Welshhans, Acting Chief of the SEC’s
Crypto Assets and Cyber Unit, noted that Forsage was “launched on a massive
scale”.
Welshhans added that the scheme was “aggressively marketed to investors.”
The SEC also noted that the four founders of the
scheme were last known to be residing in Russia, the Republic of Georgia, and
Indonesia.
The watchdog further disclosed that three of the
charged 11 individuals were promoters based in the United States.
These promoters were paid by the founders to
give endorsement to “the fraudulent blockchain scheme” on its website and
social media platforms.
Other persons charged were members of a promotional group called Crypto
Crusade, the SEC said.
This self-styled Crypto Crusade operated
from at least five different states in the US, SEC explained.
The watchdog added that the platform was the biggest promotional
group for the pyramid scheme.
The Background
According to the SEC, in January 2020, the four
founders, Vladimir Okhotnikov, Jane Doe or Lola Ferrari, Mikhail Sergeev, and
Sergey Maslakov, inaugurated Forsage.
Forsage.io functioned as a website that enabled
millions of retail investors to initiate transactions using smart contracts run
on Blockchains such as Ethereum and Binance.
SEC also alleged that Forsage for over two years
ran a pyramid scheme that paid members for recruiting others into the
circle.
According to the press statement, the Philippine
SEC issued a cease-and-desist to Forsage in September 2020
The Montana Commissioner of Securities and
Insurance also issued another in March 2021, both to deaf ears, the SEC said.
Instead, the watchdog pointed, Forsage remained floated even as its founders kept denying the claims through multiple YouTube videos.
“Fraudsters cannot circumvent the federal
securities laws by focusing their schemes on smart contracts and blockchains,”
Welshhans said.
The SEC asked that the court grant “injunctive
relief, disgorgement, and civil penalties” against Forsagei.o
Other than the four founders, the SEC said it charged the following persons with violation of the registration and anti-fraud provisions of the federal securities laws: Cheri Bowon (Missipi), Ronald Deering (Idaho), Samuel Ellis
(Louisville), and Mark Hamlin (Henricho).
Others are Carlos Martinez (Chicago), Alisa
Shepherd (Florida), Sarah Theissen (Wisconsin) and Sarah Theissen (Winconsin).
The SEC explained, “Without admitting or denying
the allegations, two of the defendants, Ellis and Theissen, agreed to settle
the charges and to be permanently enjoined from future violations of the
charged provisions and certain other activity.
“Additionally, Ellis agreed to pay disgorgement
and civil penalties, and Theissen will be required to pay disgorgement and
civil penalties as determined by the court. Both settlements are subject to
court approval.”