U.S. regulators are seizing the momentum during this ongoing crypto bear market to deal with bad actors space as many investors are already frustrated with this asset class.
The U.S. Securities and Exchange Commission today indicted 11 people in connection with Forsage, a cryptocurrency project that has raised more than $300 million from “millions of retail investors around the world,” the agency said. announced today. The accused include the four founders of the project – Vladimir Okhotnikov, Jane Doe, aka Lola Ferrari, Mikhail Sergeev and Sergey Maslakov, who were last seen in Russia, Georgia and Indonesia. According to the announcement, charges were also filed against several members of the Crypto Crusaders, a group that promoted the scheme in at least five different US states.
Forsage launched in January 2020 as a website that allowed retail investors to transact on the Ethereum, Tron and Binance blockchains, the SEC complaint said. In June 2020, Forsage was the most popular dapp on Ethereum and consumed so much on-chain bandwidth that caused a hike in gas prices. At its peak in July 2020, over $20 million in ETH was sent to the platform in a single day. Dune Analytics data shows.
According to the SEC, the project operated like a pyramid scheme for more than two years and used the assets of new investors to pay off old ones, which is typical of the structure of a Ponzi scheme. operating room pyramid schemethe fundamentally unsustainable business model in which participants recruit others to buy them with the promise of quick returns is illegal in the US.
“Scammers cannot circumvent federal securities laws by focusing their schemes on smart contracts and blockchains,” wrote Carolyn Welshhans, acting head of the SEC’s Crypto Assets and Cybersecurity Division, the SEC division that renamed to include cryptocurrency in their name and started recruiting in May of this year.
This isn’t the first time Forsage has been in the crosshairs of regulators. The Philippine Securities and Exchange Commission sent the company a cease-and-desist order in 2020 for fraud, and in 2021 the Montana Securities and Insurance Commissioner did the same. Despite these warnings, the defendants continued to promote the scheme and denied that they had used the pyramid scheme on various social media platforms, according to the SEC.
In addition to the founders, Sheri Beth Bowen, Ronald R. Deering, Samuel D. Ellis, Mark F. Hamlin, Carlos L. Martinez, Alisha R. Shepperd, and Sarah L. Theissen have also been charged with violating federal securities laws in connection with Forsage . , according to the SEC complaint. The agency says Ellis and Theissen have agreed to settle the charges.
The allegations come at a time of heightened regulatory scrutiny of the digital asset space, especially by the SEC itself. Coinbase was locked in combat with an agency regarding the sale of cryptocurrencies listed on its platform, which insists they are commodities, not securities.
Meanwhile, US Senators Kirsten Gillibrand and Cynthia Lummis trying to reach a consensus in Congress for their bill that would classify most cryptocurrencies as commodities, leaving the industry largely under the jurisdiction of the U.S. Commodity Futures Trading Commission rather than being left open to the more stringent Securities and Exchange Commission.
Credit: techcrunch.com /