The Philippine Securities and Exchange Commission (PH SEC) was cited by the U.S. Securities and Exchange Commission (U.S. SEC) regarding the former’s issuance of a cease-and-desist Order for Forsage, a fraudulent crypto pyramid and Ponzi scheme that obtained more than $300 million from millions of retail investors worldwide.
Last, August 1st, the US SEC announced that they have charged 11 individuals for their roles in creating and promoting Forsage. Those charged include the four founders of Forsage, Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov, who were last known to be living in Russia, the Republic of Georgia, and Indonesia. The U.S. SEC also charged three promoters engaged by the founders to endorse Forsage on its website and social media platforms, and several members of the so-called Crypto Crusaders—the largest promotional group for the scheme that operated in the United States from at least five different states. The SEC’s complaint seeks injunctive relief, disgorgement, and civil penalties.
In a press release published by the US SEC regarding the case, they noted that the PH SEC released the order to Forsage and Forsage Philippines to stop soliciting unregistered investments from the public using a crowdfunding platform as early as September 2020. (Read more: PH SEC Issues Cease and Desist Order to Forsage and its Promoters)
In an article by lawyer Atty. Rafael Padilla, he also emphasized that PH SEC’s move against Forsage is the “key highlight for 2020” when it comes to the Commission’s “vigilance” in issuing advisories and cease and desist order, and in taking other enforcement actions against cryptocurrency-related investment scams, Forsage being the largest and most high-profile among them.”
“Despite cease-and-desist actions against Forsage for operating as a fraud in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.” –US SEC
According to the US Commission, Forsage is a website that allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains. But, “Forsage allegedly has operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme. Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure.”
“As the complaint alleges, 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
Currently, two out of the eleven charged, Samuel D. Ellis and Sarah L. Theissen, agreed to settle the charges and to be permanently enjoined from future violations of the charged provisions and certain other activities. Moreover, Ellis agreed to pay disgorgement and civil penalties, while Theissen will be required to pay disgorgement and civil penalties as determined by the court; both of their settlements are subject to court approval.
This article is published on BitPinas: US SEC Cited Local Regulator Over Forsage Cease-and-Desist Order
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