The United States Securities and Exchange Commission (SEC) has filed charges against 11 people linked to a crypto-pyramid scheme known as Forsage. The people behind the project have successfully raised over $300 million from investors around the world.
SEC Charges 11 People in Crypto Ponzi Scheme
The SEC report says defendants in the case include three promoters currently based in the United States and four founders whose last location was Russia. Forsage is a platform claiming to be a bridge between Ethereum, Binance and Tron blockchains.
The team had promoted Forsage as a platform capable of running smart contracts across multiple blockchains. However, the company operated like a Ponzi scheme, where money from new investors paid old investors and rewarded those who recruited more employees.
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A Press release by the SEC said the commission sent a cease and desist order to Forsage in late 2020 and March 2021. However, the platform’s founders ignored the regulator’s concerns. They not only denied these allegations but also continued to promote their services.
Acting SEC Crypto Assets and Cyber Unit Chief Carolyn Welshhans commented on the development, saying fraudsters cannot avoid federal securities laws through smart contracts and blockchains. blocks and harmed retail investors investing in such platforms.
The two U.S.-based defendants have agreed to settle civil and restitution penalties as outlined by the court, to resolve the claims made by the SEC. This will release them from any further violations of securities laws.
The SEC Collaborates with the FBI to Combat Crypto Crime
The SEC actively regulates the cryptocurrency space to ensure investors in the industry are well protected. One of the people recently charged is a former Coinbase executive. Ishan Wahi was arrested by the SEC amid allegations of crypto insider trading.
FBI Deputy Director Michael J. Driscoll also said the agency is taking an active role within the cryptocurrency ecosystem to prevent fraudsters and criminals from taking advantage of loopholes to conduct illicit activities.
On August 1, Letitia James, the New York Attorney General, urged all New York residents who have suffered losses after investing in cryptocurrency scams to file complaints so that the prosecutor’s office can follow up on these cases.
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