(Reuters) — The Securities and Exchange Commission said on Monday it charged 11 people for their roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from private investors worldwide, including in the United States.
The defendants were the four founders of the scheme called Forsage. They were last known to live in Russia, the Republic of Georgia and Indonesia, the SEC said in a statement.
The accused individuals could not immediately be reached for comment.
According to the SEC’s complaint, the system’s website launched in January 2020 and allowed millions of retail investors to enter into transactions via smart contracts. It allegedly operated as a pyramid scheme for more than two years, with investors earning profits by recruiting others into the scheme, the SEC said.
Forsage also allegedly used assets from new investors to pay previous investors in a typical Ponzi structure, the SEC complaint added.
“Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,”; said Carolyn Welshhans, Acting Director of the SEC’s Crypto Assets and Cyber Unit. “Fraudsters cannot circumvent the federal securities laws by focusing their systems on smart contracts and blockchains.”
Without admitting or denying the charges, two of the defendants agreed to settle the charges and one of them agreed to pay penalties, the SEC said.