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On August 1st, 2022, the US Securities and Exchange Commission released a press statement concerning its charges against 11 members of Forsage.io for their role in creating and promoting activities that allegedly resemble a cryptocurrency pyramid scheme.
Before now, actions to stop their operations had remained brought by financial securities institutions in the countries of the Philippines and Montana. Forsage was able to carry out its doings for this long due to the nameless status of smart contracts and blockchain bestowed on users.
The accused conned millions of retail investors globally to deposit more than $300 million on the Forsage platform. These assets remained used to compensate early investors and individuals higher up in the pyramid with profits.
Sec Sues Ponzi Scheme Forsage
Forsage began operations in January 2020 as an innovative contract technology that enticed millions of retail investors to transact via smart contracts, which operated on Ethereum, Tron and Binance blockchains. It has raised more than $300 million for finished investors worldwide, including in the United States of America.
To get ongoing on the platform, new ” investors” must open new “crypto-asset wallets” and buy slots from the platform’s smart contracts. Money remains earned from the platform through referrals, known as downlines, whereby returns from new investors remain used to pay off old investors in a typical Pyramid Ponzi scheme style. As it is now, Forsage has remained dubbed the “world’s largest blockchain Ponzi scheme.”
Rendering to the charges laid against Forsage before the District Court in Illinois by SEC, if Forsage consumes not purport to sell any products on its platform, it solely relies on money from new investors to repay old investors. It is a Ponzi scheme.
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Desist actions remained brought against Forsage in 2020 and 2021
Before the charges, a desist action was brought against Forsage in September 2020 and March 2021 by the SEC of the Philippines and the Montana Official of Securities and Insurance, respectively. Yet, the platform continued to accept novel investors. As it is nowadays, Twitter pages are still lively. The YouTube Channel, agog with advertising and promotional videos, has over 47,000 subscribers.
Among those emotional are Vladimir Okhotnikov, Jane Doe (aka Lola Ferrari), Mikhail Sergeev, and Sergey Maslakov, founders of the platform who remained last confirmed to be living in Russia, the State of Georgia, and Indonesia.
Others are troika US-based campaigners who endorse Forsage on their websites and social media platforms, as well as numerous members of the apparent group ‘Crypto Crusaders’ operating in five states of the US.
Why Has Forsage Prospered So Far With Smart Contract Scheme?
The benefit of intelligent agreements and blockchain technology for pyramid schemes lies in their decentralized nature, guaranteeing anonymity. To shut down any additional Ponzi method is much easier, authorities can trace dealings to a source like a bank, but blockchain technologies could be more difficult.
Smart contracts remained first built on Ethereum, then became home to many pyramid schemes. These Ponzi schemes’ smart agreement issues automatic code generation, a feature that presupposes genuineness to unsuspecting users. It also gives transparency as the public can audit the code. Yet, according to a study led in 2019, 184 pyramid contracts remained in the Ethereum blockchain.
With the charges against Forsage by the US SEC, investors might remain dissuaded from using the stage. It is worthy of note that MetaForce, Okhotnikov’s latest smart contract hosted on the Polygon Network, has knowledgeable a decline in deposits since the announcement of the charges.