It has been a rough month for the crypto sector, and it’s only the third day of August.
From cross-chain bridge hacks draining hundreds of millions of dollars in customer funds to the Securities and Exchange Commission coming after crypto ponzi schemes, this corner of the market can’t catch a break.
The developments add to an already torrid year for the crypto market, which has seen huge declines as fears around tightening monetary policy and a lack of liquidity set in.
The flood of news is difficult for even insiders to track, so here’s a rundown of what you’ve missed since Monday.
Monday
The U.S. Securities and Exchange Commission headquarters in Washington on Feb. 23, 2022.
Al Drago/Bloomberg via Getty Images
The Securities and Exchange Commission on Monday filed a civil complaint charging 11 people for their roles in creating and promoting an allegedly fraudulent crypto-focused pyramid scheme that raised more than $300 million from investors.
The scheme, called Forsage, claimed to be a decentralized smart contract platform, allowing millions of retail investors to enter into transactions via smart contracts that operated on the ethereum, tron and binance blockchains. The SEC alleges that for more than two years, the setup functioned like a standard pyramid scheme, in which investors earned profits by recruiting others into the operation.
In the SEC’s formal complaint, Wall Street’s top watchdog calls Forsage a “textbook pyramid and Ponzi scheme,” in which Forsage aggressively promoted its smart contracts through online promotions and new investment platforms, all while not selling “any actual, consumable product.” The complaint adds that “the primary way for investors to make money from Forsage was to recruit others into the scheme.”
The SEC said Forsage operated a typical Ponzi structure, wherein it allegedly used assets from new investors to pay earlier ones.
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” wrote Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit.
“Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”
Forsage, through its support platform, declined to offer a method for contacting the company and did not offer comment.
Four of the eleven individuals charged by the SEC are founders of Forsage. Their current whereabouts are unknown, but they were last known to be living in Russia, the Republic of Georgia and Indonesia.
The SEC has also charged three U.S.-based promoters who endorsed Forsage on their social media platforms. They were not named in the commission’s release.
Forsage was launched in January 2020. Regulators around the world have tried a couple of times to shut it down. Cease-and-desist actions were brought against Forsage first in September of 2020 by the Securities and Exchange Commission of the Philippines. In March 2021, the Montana…
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