According to a filing with the U.S. District Court, the SEC alleges that the founders of the Forsage platform have used a "fraud pyramid and multi-level Ponzi scheme" to raise funds (over $300 million) from retail investors across the globe.
Forsage bills itself as a blockchain for retail investors to trade on Ethereum, Tron, and Binance.
The SEC has charged the company with running an extensive Ponzi scheme for over two years. Their recruiter takes advantage of investors by recruiting more people and then taking money from them to pay off the initial group.
Carolyn Welshhans, chief of the SEC's Crypto Assets and Cyber Unit, said:
"Scammers cannot circumvent federal securities laws by shadowing their schemes in smart contracts and blockchain."
Four of the 11 individuals charged were the founders of Forsage, namely Vladimir Okhotnikov, Jane Doe aka Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov. The SEC's complaint also included seven promoters, three of which were in a U.S.-based promotional group called the "Crypto Crusaders."
All 11 individuals are charged with violating "Unregistered Offers and Sales of Securities" under Section 5 A & C and "Fraud" under Section 17(a) (1 & 3) of the U.S. Securities Act. In addition, the defendants have also been charged with "Fraud" under Section 10 B-C of the U.S. Exchange Act.