SEC charges 11 people in a $300 million crypto pyramid scheme

The Securities and Exchange Commission (SEC) on Monday announced that it charged 11 people for being part of a fraudulent crypto pyramid and Ponzi scheme that raised over $300 million from investors worldwide.

The company Forsage launched its website in January 2020 to allow millions of retail investors to enter into transactions via smart contracts operating on Ethereum, Tron, and Binance blockchains., the SEC said in a statement.

The company allegedly operated as a pyramid scheme for more than two years. Investors would earn money by recruiting others to take part in the company. In turn, the company would use the assets from new investors to pay earlier investors.

"Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, acting chief of the SEC's Crypto Assets and Cyber unit.

"Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains," she added.

Among those charged include the founders of the scheme, which were living in Russia, the Republic of Georgia, and Indonesia, and three U.S.-based promoters hired to promote Forsage. Several members of the so-called Crypto Crusaders, the largest promotional group for the scheme, were also charged.  

Two defendants agreed to settle the charges and one agreed to pay the penalties.

Those charges could not be reached for comment.