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11 individuals charged under international crypto Ponzi scheme

August 5, 2022

The US Securities and Exchange Commission (SEC) has indicted 11 individuals for their role in creating and promoting Forsage, an alleged fraudulent cryptocurrency pyramid scheme and Ponzi scheme that raised over $300m (£246m, €293m) from millions of private investors around the world.

The defendants include four Forsage organisers known to have resided in Russia, Georgia and Indonesia, as well as three U.S. promoters. The founders hired the latter mentioned to administer Forsage websites and social media. The defendants also include members of the Crypto Crusaders advertising company.

List of the accused persons:

• Vladimir Okhotnikov;

• Jane Doe (also known as Lola Ferrari);

• Mikhail Sergeev;

• Sergey Maslako;

• Samuel Ellis;

• Mark Hamlin;

• Sara Theissen;

• Carlos Martinez;

• Ronald Dearing;

• Cherie Beth Bowen; as well as

• Alisha Sheppard.

Pyramid- Ponzi variation

According to the SEC complaint, in January 2020, Okhotnikov, Ferrari, Sergeev and Maslakov launched Forsage. This website allowed a huge number of retailers to transact via smart contracts operated on the Ethereum, Tron and Binance blockchains.

Forsage has allegedly been operating as a financial pyramid for more than two years, in which investors make a profit by attracting new participants to this scheme. According to the SEC, Forsage also allegedly used the assets of new investors to pay off existing investors, as is typical of a Ponzi scheme.

Even though in September 2020, the Philippine Securities and Exchange Commission and in March 2021, the Montana Securities and Insurance Commissioner took actions against Forsage aimed at stopping its illegal activities, the defendants allegedly continued to promote the scheme, refuting the claims through various means, such as posting several exculpatory videos on YouTube.

The head of the SEC's Crypto Assets and Cyber Security Division, Carolyn Welshhans, said that according to official charges, Forsage is a fraudulent financial pyramid in which investors were engaged in aggressive promotion and massive attraction of new members. "Scammers will not be able to circumvent federal securities laws by focusing their schemes on smart contracts and blockchains," she said.

Without admitting or denying the charges, the two defendants, Ellis and Theissen, agreed to settle the charges by obtaining a "permanent ban" on further violations of the provisions under which they are charged, as well as certain other actions.

In addition, Ellis agreed to return illegally obtained funds and be held civilly liable. Theissen will face similar sanctions. Both settlements are subject to court approval.

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