SEC Unveils $300 Million Crypto Ponzi Scheme

The US Securities and Exchange Commission (SEC) has 11 people charged For their role in a cryptocurrency Ponzi scheme that may have earned as much as $300 million from investors.

Crypto Ponzi scheme has been discontinued

The Ponzi scheme – which operated under the Forsage name – was in operation for more than two years at the time the charges were filed. The founders – along with several individuals designated as promoters – have been thoroughly investigated by law enforcement agents.

Launched in January of 2020, Forsage explains via its website that it’s in the business of giving retail investors crypto opportunities they wouldn’t otherwise be able to access. The website version claimed that the organization sought to provide opportunities for investors to participate in smart contract transactions that took place on the Ethereum, TRON, and Binance blockchains. Investors can earn money through the company’s referral program to give to those who have tried to register them in new accounts.

Like any typical Ponzi scheme, Forsage is believed to have used new investors’ money to pay off old players under the guise that they were earning returns and profits. Caroline Welchance, acting head of the Securities and Exchange Commission’s Crypto and Electronic Assets Unit, explained in a recent interview:

Forsage is a fraudulent pyramid scheme that has been widely launched and aggressively marketed to investors. Fraudsters cannot circumvent federal securities laws by focusing their schemes on smart contracts and blockchain.

It is believed that the participants or promoters of the company were hiding in countries such as Georgia, Indonesia and Russia at the time of writing. Several of the defendants did not file, although three individuals — without denying or pleading guilty — stated that they would settle with the Securities and Exchange Commission and pay fines related to the charges against them.

Cryptographic schemes like this have become very popular in recent years. earlier in the day, Live Bitcoin News He posted a similar article about two residents of Orange County, California, who were sentenced to two and three years in prison respectively for their role in a crypto scam that stole nearly $2 million from investors.

Why does this happen so often?

Both men lured investors under the guise that by purchasing their DROP token, they would gain access to Dex, a proprietary algorithmic trading bot that would lead them to great wealth and financial returns. In truth, Dex wasn’t nearly as profitable as the men claimed, and most of the investors’ money was used to make payments to either the founders or their business partners.

Upon their arrest and indictment, both perpetrators – according to federal prosecutors – showed intense remorse for their actions and accepted their fates without a fight. It was alleged in court documents that they were simply too excited to be a part of the growing crypto industry and didn’t take into account the consequences of their actions.

Tags: Forsage, Ponzi scheme, SEC

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