The four founders of the scheme named Forsage were among those charged. The SEC said that they were last known to be living in Indonesia, the Republic of Georgia and Russia.
According to the SEC's complaint, the scheme's website was launched in January 2020 and allowed millions of retail investors to enter into transactions via smart contracts. The SEC said that it was operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme.
According to the SEC complaint, Forsage used assets from new investors to pay earlier investors in a typical Ponzi structure.
Carolyn Welshhans, acting chief of the SEC's Crypto Assets and Cyber unit, said that Forsage is a fraudulent pyramid scheme on a massive scale and aggressively marketed to investors. Fraudsters can't circumvent the federal securities laws by focusing their schemes on smart contracts andBlockchains. Two of the defendants agreed to settle charges and one of them agreed to pay penalties if you don't admit or deny the allegations, the SEC said.