Security News > 2022 > August > Charges filed over $300m 'textbook pyramid and Ponzi scheme' crypto startup

Forsage, an alleged crypto Ponzi scheme purporting to be a decentralized smart contract platform, bilked millions of investors worldwide out of more than $300 million, according to America's securities watchdog.

These transactions totaled more than $300 million, according to the SEC. However, like any other pyramid scheme, the primary way that investors made money from Forsage was to recruit other investors, according to the watchdog.

As the SEC's lawsuit [PDF] noted: "Forsage is a textbook pyramid and Ponzi scheme."

"As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, acting chief of the SEC's Crypto Assets and Cyber Unit, in a statement.

To get in on the multi-level marketing scheme, according to the regulator, a Forsage investor created a crypto wallet and then bought "Slots," which allowed them to earn money off of others recruited into the scheme, called "Downlines."

"When an investor purchased a slot, a portion of that investment was directed to the persons who recruited the investor and the investor in turn became an upline to whomever the investor recruited," according to the court documents.

News URL

https://go.theregister.com/feed/www.theregister.com/2022/08/02/sec_smacks_fraudsters_in_alleged/