SEC Charges 11 for $300M in Crypto Ponzi Scheme Spanning Multiple Countries

The United States Securities and Exchange Commission (SEC) has charged 11 individuals for creating and promoting a fraudulent crypto pyramid scheme and Ponzi scheme. The authority published a press release on August 1, saying that the $300 million crypto pyramid scheme involved perpetrators from several countries. The complaint was filed in the United States District Court in the Northern District of Illinois.

The pyramid scheme in question is Forsage, and its four founders have been known to be in Russia, the Republic of Georgia, and Indonesia. Three individuals in the U.S. have also been accused of promoting Forsage, as well as a group called Crypto Crusaders, which operated in the U.S. in five states.

Key Takeaways

  • The SEC has charged 11 individuals for creating and promoting a fraudulent crypto pyramid and ponzi scheme.
  • The founders were last located in Russia, the Republic of Georgia, and Indonesia,
  • The scheme, called Forsage, allowed retail investors to enter into transactions on smart contracts. 
  • The investors were told they would receive profits if they recruited others into the scheme.
  • The SEC is seeking injunctive relief, disgorgement, and civil penalties.

Forsage’s website allowed retail investors to enter into transactions on various blockchains, including Ethereum, Binance, and Tron. In typical pyramid scheme fashion, these investors were told that they would earn profits if they recruited others into the scheme. The SEC also says that Forsage used the funds from the new investors to pay off the earlier ones.

The SEC filed a complaint about the project in January 2020, with the four founders—Vladimir Okhotnikov, Jane Doe a.k.a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov—being mentioned. The others who were charged were Cheri Beth Bowen, Ronald R. Deering, Samuel D. Ellis, Mark F. Hamlin, Carlos L. Martinez, Alisha R. Shepperd, and Sarah L. Theissen.

The latter group of individuals was charged with violating the registration and anti-fraud provisions of the federal securities laws. The SEC is looking to obtain injunctive relief, disgorgement, and civil penalties.

The SEC has been at the forefront of taking crypto action, and it is handling numerous cases. Earlier this year, the financial watchdog increased the number of positions allocated to its crypto team in order to protect investors from cyber-related threats.It has talked about broad regulation for crypto in the past, though there has not been much information on this. The SEC has said that investor protection and market manipulation prevention are two key priorities. SEC Chair Gary Gensler has been clear that he wants to bring many tokens that he believes act as securities into the purview of the SEC. He has also emphasized that he was not entirely negative about cryptocurrencies.

Article Sources
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  1. U.S. Securities and Exchange Commission. "SEC Charges Eleven Individuals in $300 Million Crypto Pyramid Scheme."

  2. SEC. ''SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit''
  3. Forbes. ''SEC Chairman Gary Gensler Implies That Ether Is A Security And Falls Under His Jurisdiction''
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