SEC Charges 11 People in Alleged $300 Million Crypto Fraud

The United States Securities and Exchange Commission (SEC) on Aug. 1 charged 11 people for their roles in creating and promoting Forsage, an allegedly fraudulent crypto pyramid scheme that raised over $300 million from investors.

In a civil complaint filed in the U.S. District Court of Northern District of Illinois, the SEC alleged that Forsage “aggressively” promoted its smart contracts through online promotions and new investment platforms while not selling “any actual, consumable product.”

The SEC alleged that Forsage was a “textbook pyramid and Ponzi scheme,” in which investors earned profits by recruiting others into the scheme and used assets from new investors to pay earlier investors.

Forsage has faced cease-and-desist actions from the Securities and Exchange Commission of the Philippines in September 2020 and from the Montana commissioner of securities and insurance in March 2021, but it allegedly continued to promote the scheme while denying the claims in several Youtube videos and other means.

“Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors. Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains,” Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement.

The SEC charged the four founders of Forsage — Vladimir Okhotnikov, Jane Doe aka Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov — who were last known to be living in Russia, the Republic of Georgia, and Indonesia.

The SEC also charged three U.S.-based promoters who endorsed Forsage on their social media platforms, including its official Youtube channel. The complaint did not name the promoters.

The SEC also charged several members of the so-called Crypto Crusaders, which was allegedly the largest promotional group for the scheme in the U.S.

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