Yet another cryptocurrency operation has been accused of scamming its customers. This time, the US Securities and Exchange Commission alleges that crypto trading platform Forsage.io has been running a "textbook pyramid and Ponzi scheme." The agency has charged 11 people in a complaint filed earlier today. Without admitting or denying guilt, two of the charged intend to settle.
When reached for comment via its support chat line, a Forsage representative told PC Gamer that the SEC's charges are "the nonsense of cryptocurrency newcomers" and "not true."
The SEC alleges that Forsage, which allows users to make transactions on the Ethereum, Tron, and Binance blockchains, has been operating a pyramid scheme where investors earn money by recruiting others into the platform. It also claims that new investor money has been used to pay older investors, a classic Ponzi scheme.
Forsage.io allegedly worked with a group called the "Crypto Crusaders" to promote its services and gain new investors.
The Montana SEC sent the company cease-and-desists notices in 2021. Forsage denied the allegations on YouTube and social media (in posts it since removed) and continued to operate.
"Forsage does not try to hide the fact they are a pyramid scheme. Members must pay with Ethereum cryptocurrency to the person above them to buy a position on the pyramid," said the Montana SEC in the 2021 statement. The Philippines SEC also sent cease and desist notices to Forsage in 2020.
Almost two weeks ago, the Forsage YouTube page posted a video about an upcoming relaunch that promises to break "new records" and make "new crypto millionaires," featuring footage of yachts and people celebrating their gains.
The SEC's Crypto Assets and Cyber Unit has been in the news recently for charging multiple people in the first-ever crypto insider trading case just a few weeks ago.
"Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains," said Carolyn Welshhans, acting chief of the SEC Crypto Assets and Cyber Unit.
Those charged in the Forsage case include people from Russia, Indonesia, the Republic of Georgia, and the United States. Two of the Americans charged have agreed to settle charges pending court approval, but the settlement doesn't constitute an admission or denial of the allegations.
