SEC Charges 11 for $300M in Crypto Ponzi Scheme

The United States Securities and Exchange Commission (SEC) has indicted 11 people for creating and promoting a fraudulent crypto pyramid and Ponzi scheme. The authority issued a press release on August 1, stating that the $300 million crypto-pyramid scheme involved perpetrators from multiple countries. The lawsuit was filed in the United States District Court for the Northern District of Illinois.

The pyramid scheme in question is Forsage, and its four founders are known to be in Russia, the Republic of Georgia, and Indonesia. Three people in the United States were also accused of promoting Forsage, as well as a group called Crypto Crusaders, which operated in five states in the United States.

Key points to remember

  • The SEC has indicted 11 people for creating and promoting a fraudulent crypto-pyramid and ponzi scheme.
  • The founders were last in Russia, the Republic of Georgia and Indonesia,
  • The program, called Forsage, allowed retail investors to transact smart contracts.
  • Investors were told that they would receive benefits if they recruited others into the program.
  • The SEC is seeking an injunction, a refund and civil penalties.

The Forsage website allowed retail investors to transact on various blockchains, including Ethereum, Binance, and Tron. In typical pyramid scheme fashion, these investors were told that they would make a profit if they recruited others into the scheme. The SEC also claims that Forsage used funds from new investors to pay off previous ones.

The SEC filed a complaint about the project in January 2020, with all four founders – Vladimir Okhotnikov, Jane Doe aka Lola Ferrari, Mikhail Sergeev and Sergey Maslakov – being mentioned. The other defendants were Cheri Beth Bowen, Ronald R. Deering, Samuel D. Ellis, Mark F. Hamlin, Carlos L. Martinez, Alisha R. Shepperd and Sarah L. Theissen.

This latter group of individuals has been charged with violating registration and anti-fraud provisions of federal securities laws. The SEC is seeking an injunction, refund and civil penalties.

The SEC has been at the forefront of crypto action and is dealing with many cases. Earlier this year, the financial watchdog increased the number of positions assigned to its crypto team to protect investors from cyber threats.He has talked about extensive crypto regulation in the past, although there hasn’t been much news about it. The SEC said protecting investors and preventing market manipulation are two key priorities. SEC Chairman Gary Gensler has made it clear that he wants to place many tokens that he believes act as securities under the SEC. He also pointed out that he was not entirely negative about cryptocurrencies.

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