On Monday, the Securities and Exchange Commission (SEC) announced that it had arrested 11 people for their roles in creating and promoting an alleged crypto pyramid and Ponzi scheme. The scam collected more than $300 million from investors.
The platform, known as Forsage, was marketed as a decentralized smart contract system. It also allowed millions of retail investors to use smart contracts to trade with one another.
The SEC claims that the smart contracts on the ethereum, Tron, and Binance blockchains were all counterfeit. However, according to the SEC, this setup functioned like a regular pyramid scheme for more than two years beneath the surface.
Forsage operations are likened to a “textbook pyramid and Ponzi scheme”
The Securities and Exchange Commission charged the operators of Forsage, a purported multilevel marketing scheme that promised to make hefty returns for investors. Users of Forsage received profits by recruiting new people to join the alleged fraud, which took place for over two years. Additionally, Forsage was accused of using money from fresh investors to pay earlier investors, as is typical with Ponzi scams.
According to an entity`s statement released Monday, Forsage allegedly obtained more than $300 million from retail investors worldwide, including the United States, for an illicit purpose. The organization’s four founders and several others were charged with promoting the nine-figure fraud.
