WASHINGTON–Eleven people have been charged in a civil complaint filed by the SEC for allegedly creating and promoting a 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, according to the SEC.
“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,” MSNBC stated in its analysis.
In its complaint, the SEC referred to Forsage as a "textbook pyramid and Ponzi scheme," in which the company allegedly aggressively promoted its smart contracts through online promotions and new investment platforms, while all the while not selling "any actual, consumable product."
Money From Recruiting Others
In addition, the complaint states 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, noted MSNBC.
The news outlet reported that Forsage, through its support platform, declined to offer a method for contacting the company and did not offer comment.
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