HomeCrypto NewsPress ReleasesSEC Charges 11 In Global Blockchain Fraud Scheme

SEC Charges 11 In Global Blockchain Fraud Scheme

SEC officials charge 11 in global blockchain fraud scheme

Washington D.C. — The U.S. Securities and Exchange Commission has charged 11 people, including seven U.S. nationals, for creating and promoting Forsage. The SEC believes Forsage was a crypto pyramid scheme, raising more than $300 million from retail investors globally, including investors in the United States.

Among those charged were Forsage’s four founders, who are foreign nationals, three U.S.-based promoters, and several members of the Crypto Crusaders, a U.S.-based promotional group.

Jane Doe, a/k/a Lola Ferrari, Sergey Maslakov, Vladimir Okhotnikov, and Mikhail Sergeev, launched Forsage.io, in January 2020, according to the complaint. Forsage.io allows retail investors to enter into smart contracts and operates on the Ethereum, Tron, and Binance blockchains. The complaint further alleges that Forsage has operated as a pyramid scheme for more than two years. A pyramid scheme is one in which investors earn profits by recruiting others to invest, with the number of investors increasing with each level. Forsage also allegedly used assets from new investors to pay earlier investors, the complaint says.

The Securities and Exchange Commission of the Philippines issued a cease-and-desist order against Forsage in September 2020. The Montana Commission of Securities and Insurance also issued one in March 2021. Forsage and its leadership ignored both orders, the SEC said.

“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. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”

The complaint also charges seven others with violating the registration and anti-fraud provisions of the federal securities laws. Those seven, according to the SEC, are “Cheri Beth Bowen, of Pelahatchie, Miss., Ronald R. Deering, of Coeur d’ Alene, Idaho, Samuel D. Ellis, of Louisville, Ky., Mark F. Hamlin, of Henrico, Va., Carlos L. Martinez, of Chicago, Ill., Alisha R. Shepperd, of Dunedin, Fla., and Sarah L. Theissen, of Hartford, Wis.”

The complaint, filed in the U.S. District Court of Northern Illinois, seeks an injunction and civil penalties. It also asks that the court require those involved to surrender their profits.

Ellis and Theissen have agreed to settle the charges and refrain from future violations without admitting or denying the allegations. They also agreed to return any profits and to pay civil penalties. Their settlements are subject to court approval.

Liz Canizares and Pamela Sawhney, members of the SEC’s Crypto Assets and Cyber Unit, led the investigation. Their supervisors were Welshhans and Amy Friedman. Canizares, Sawhney, Patrick Costello, and Christopher Carney are conducting the litigation under the supervision of Olivia Choe.

Source: https://www.sec.gov/news/press-release/2022-134

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