SEC charges 11 individuals over $300M crypto ‘pyramid scheme’

cointelegraph.com:

The Securities and Exchange Commission (SEC) has charged 11 individuals for their alleged role in the creation of a "fraudulent crypto pyramid scheme" platform Forsage. 

The charges were laid in a United States District Court in Illinois on August 1, with the SEC alleging that the founders and promoters of the platform used the “fraudulent crypto pyramid and Ponzi scheme” to raise more than $300 million from “millions of retail investors worldwide.”

The SEC complaint states that Forsage was modeled such that investors would be financially rewarded by recruiting new investors to the platform in a "typical Ponzi structure," which spanned multiple countries including the United States and Russia. 

According to the SEC, a Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. These schemes often solicit new investors by promising to invest funds in opportunities that generate high returns for little risk. 

In the court document, the SEC stated that:

According to the SEC, Forsage’s alleged Ponzi scheme works by firstly enabling new investors to set up a crypto-asset wallet and purchase “slots” from Forsage’s smart contracts.

Those slots would give them the right to earn compensation from others whom they recruited into the scheme, referred to as “downlines”, and also from the community of Forsage investors in the form of profit sharing, referred to as “spillovers”.

Carolyn Welshhans, Acting Chief of the SEC’s Crypto Assets and Cyber Unit called Forsage a “fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors."

She also added that decentralized technologies cannot act as an escape route for illegal conduct:

In addition to the four founders, who