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In the 1920s, a new form of investment fraud roared into the
markets with the advent of the Ponzi scheme.
Earlier this month, the U.S. Securities and Exchange Commission
filed a complaint captioned SEC v. Okhotnikov in the U.S. District
Court for the Northern District of Illinois, alleging that 11
crypto founders and promoters used the same illegal money-making
tactics employed by Charles Ponzi a century ago.1
The SEC alleged that the defendants employed a “textbook
pyramid and Ponzi scheme,” fraudulently raising more than $300
million from millions of retail investors worldwide, in connection
with the crypto platform Forsage.
This action continues the wave of aggressive SEC enforcement in
the crypto space.
Forsage Complaint
The SEC’s complaint alleges a pyramid and Ponzi scheme under
which investors profited off the participation of recruits.
According to the SEC’s complaint, Forsage was launched in
January 2020 by four Russian nationals who aggressively marketed
online crypto investments to U.S. and foreign investors.
In addition to the four Russian founders, the SEC also sued
seven U.S. nationals and residents who allegedly promoted the
scheme using YouTube channels and social media platforms.
The SEC alleged that investors were induced to enter into crypto
transactions via smart contracts that operated on the…
