A flag outside the U.S. Securities and Exchange Commission headquarters in Washington, D.C., U.S., on Wednesday, Feb. 23, 2022.
Al Drago | Bloomberg | Getty Images
The Securities and Exchange Commission on Monday filed a civil complaint charging 11 people for their roles in creating and promoting an allegedly fraudulent crypto-focused pyramid scheme that raised more than $300 million from investors.
The scheme, called Forsage, claimed to be a decentralized smart contract platform, and it allowed millions of retail investors to enter into transactions via smart contracts that operated on the ethereum, tron and binance blockchains. But under the hood, the SEC alleges that for more than two years, the setup functioned like a standard pyramid scheme, in which investors earned profits by recruiting others into the operation.
In the SEC’s formal complaint, Wall Street’s top watchdog calls Forsage a “textbook pyramid and Ponzi scheme,” in which Forsage aggressively promoted its smart contracts through online promotions and new investment platforms, while all the while not selling “any actual, consumable product.” The complaint goes on to say that “the primary way for investors to make money from Forsage was to recruit others into the scheme.”
In a statement, the SEC added that Forsage operated a typical Ponzi structure, wherein it allegedly used assets from new investors to pay earlier ones.
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive…
