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The four original Forsage plan participants were among those arrested. According to a report by the SEC, their last known whereabouts were in Russia, the Republic of Georgia, and Indonesia.
A spokesperson for those accused was not immediately available for comment. The SEC claims that the scheme’s website went live in January 2020, allowing millions of regular investors to engage in transactions using smart contracts. In addition, the SEC claims that it functioned as a pyramid scheme for over two years in which participants received money for bringing in new members.
According to the SEC complaint, Forsage also followed a classic Ponzi scheme by using the money from new investors to settle older ones.
Carolyn Welshhans, interim head of the SEC’s Crypto Assets and Cyber section, described Forsage as a “massive, fraudulent pyramid scheme” that included “aggressive marketing” to potential investors. Fraudsters “cannot concentrate their plans on smart contracts and blockchains to dodge the federal securities rules.”
Two of the defendants have accepted to pay settlements, and one has agreed to pay fines, the SEC said, but neither has admitted or denied the claims.