The Securities and Exchange Commission (SEC) charged 11 individuals for their alleged roles in creating a $300 million crypto pyramid scheme. The alleged fraudulent blockchain scheme spanned multiple countries including the U.S. and Russia.
The charges were brought against the 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 engaged by the founders to endorse Forsage on its website and social media platforms. Also charged were members of the so-called “Crypto Crusaders” – the largest promotional group for the Forsage scheme that operated in the United States from at least five different states.
According to the SEC complaint, Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev and Sergey Maslakov launched Forsage.io, a website that allowed millions of retail investors to enter transactions via smart contracts that operated on the Ethereum, Tron and Binance blockchains. However, Forsage allegedly operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme.
Despite cease-and-desist actions against Forsage for operating as a fraud in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.
“As the complaint alleges, 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.”