The days of the Bernie Madoff-like Ponzi schemes are long gone. The bad guys — and the authorities — are now focused heavily on crypto-focused pyramid schemes, which bring an entirely new level of complication to the age-old crime.
According to CNBC, the Securities and Exchange Commission (SEC) recently filed a civil complaint against 11 people accused of perpetrating a crypto-based Ponzi scheme that drew in investors from around the world, including in the United States.
In total, the alleged crypto-fraudsters raised an astonishing $300 million in investments, in a scheme that was called Forsage, which claimed to be a decentralized smart contract platform that CNBC said “allowed millions of retail investors to enter into transactions via smart contracts that operated on the ethereum, tron and binance blockchains.”
Today we charged 11 individuals for their roles in creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from millions of retail investors worldwide, including in the United States.
— U.S. Securities and Exchange Commission (@SECGov) August 1, 2022
The complaint filed by the SEC noted that “the primary way for investors to make money from Forsage was to recruit others into the scheme,” which is typical Ponzi form.
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” said Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit.
Four of the 11 people charged by the SEC are the founders of the Forsage scheme, however, their whereabouts are unknown. They were last believed to have residences in Russia, the Republic of Georgia and Indonesia, making finding them a monumentally difficult task.
Notably, three U.S.-based promoters of the scheme were also charged, though they went unnamed in the SEC’s press release.
Most of those who have been charged have reportedly denied their involvement in the scheme, although two of the charged individuals admitted to taking part, and subject to court approval, are willing to settle the case.