FOUNDERS and promoters of Forsage, a decentralized application for Ethereum cryptocurrency, were charged by the US Securities and Exchange Commission (SEC) assisted by the Philippine SEC for operating a fraudulent pyramid scheme.
In a media release on Wednesday, the Philippine SEC said four founders, three US-based promoters of the investment scam on websites and social media platforms, and members of Forsage’s promotional group, Crypto-Crusaders, were charged by the US SEC.
The local regulator cited a statement issued by its US counterpart on Aug. 1 that 11 individuals were charged for their roles in creating and promoting Forsage.
Forsage allegedly raised more than $300 million from millions of retail investors worldwide, including in the Philippines.
Vladimir Okhotnikov, Jane Doe or Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov were said to have launched Forsage.io in January 2020.
Forsage allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains, the media release said.
However, the decentralized application has operated as a pyramid scheme wherein investors earned profits by recruiting others while using assets from new investors to pay earlier investors like a typical Ponzi structure.
The Philippine SEC provided assistance to the US SEC by sharing information gathered while investigating Forsage.
On Sept. 27, 2020, the Philippine SEC issued a cease-and-desist order against Forsage for illegal solicitation through a crowdfunding platform based on the Ethereum blockchain technology.
The local regulator said the Montana Commissioner of Securities and Insurance also ordered Forsage to cease and desist from operating in March 2021.
“The SEC Philippines is always ready to collaborate with its counterparts in other jurisdictions, as well as other regulators, to stamp out investment scams in other parts of the world. We remain committed to promoting the rights and welfare of investors, as we work toward the common goal of protecting the investing public,” Philippine SEC Chairperson Emilio B. Aquino said. — Justine Irish D. Tabile