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The SEC, the Securities and Exchange Commission, just filed a lawsuit against 11 team members at Forsage, a popular decentralized application launched in 2020. The US Financial Market Authority accuses the project of only one The Ponzi scheme is more applicable to cryptocurrencies..
They are blamed “for their role in the creation and promotion of Forsage, a fraudulent crypto-pyramid and Ponzi scheme”. The fraud will affect tens of millions of individual investors, more than what has been raised in total 300 million dollars.
What you need to know about Forsage
At its launch in early 2020, the Forsage was sold as “the first decentralized smart contract platform for companies”. Specifically, it will allow its users to transact on three blockchains: Ethereum, Binance and Tron. As of June 2020, Forsage was the most used dapp on Ethereum. This consumed so much bandwidth on the channel that the cost of gas skyrocketed. At its peak, the platform was making over $ 20 million in a single day.
In fact, Forsage is based on a multilevel marketing system (MLM). yourrewards its users based on the referrals they receive. They can join the system by paying a membership fee after being invited by an existing member. Once the network is integrated, the only goal will be to attract new users. You also have to pay the amount of the registration fee. This sum was then divided between the godfather and the members above him in the pyramid. Also, there doesn’t seem to be any white paper on which to base the platform’s true utility.
Also find on social networks collected a lot of feedback from private investors register on Forsage. In general, the talk revolves around a crowdfunding platform and a project that will not take off without a large number of investors.
SEC’s Caroline Welshhans summarizes the facts as follows:
According to the complaint, Forsage is a widely implemented pyramid scam and aggressively advertised to investors.
Who are the accused?
Among the accused there are 4 founding members of Forsage. The SEC quickly identified Vladimir Okhotnikov, Jane Doe aka Lola Ferrari, Sergey Maslakov, and Mikhail Sergeyev. Last time I heard they lived in Russia, Indonesia and Georgia.
The other seven defendants, residing in the United States, are believed to be part of a group known as The Crusader crypto. It was they who did more to promote the system in the United States. The accused US promoters “participated in the unregistered placement and sale of Forsage securities. While working with the founders to promote Forsage in the US, the promoters were involved in a plan to defraud investors, “the complaint reads. It points out that some of the defendants called themselves” Crypto Crusaders “.
The two sponsors of the group have already decided to compensate the victims and to regulate the civil penalties. However, they have yet to deny or acknowledge the allegations. On the other hand, The Forsage team rejects the complaint. The defense chosen is to place the blame on specific investors. It is they who will use their platform for malicious purposes:
Forsage is a decentralized platform where you can build your team and win together. However, some members use illegal methods to promote this ideology and present The Fast and Furious as an investment opportunity for personal gain.
this is not the first time that financial authorities accuse Forsage of fraud based solely on a Ponzi scheme. When he was the most active Ethereum dapp, the Philippine SEC had already issued a legal notice against him.
In April 2021 it will be the turn of securities supervisionState of Montana ask Forsage to stop his activities. CSI Commissioner said of the platform at the time:
There is no product behind this (…) Forsage is no longer even trying to hide that it is a pyramid scheme. New members must pay a parent with Ethereum (Ether) cryptocurrency to scale this pyramid structure.
It now seems certain that Forsage is actually based on a Ponzi scheme. These scams are widespread in the cryptocurrency world. Play-to-ear games are regularly highlighted. The term “ponzinomics” has its origins in the crypto space to refer to the business model of a cryptographic project that depends on constant investments by new market entrants. Usually, the system is collapsing when the number of new users ceases to cover the withdrawal requests of the first participants. Therefore, we can only urge you once again to remain vigilant when deciding to invest in cryptocurrencies.