According to a press release issued by the U.S. Securities and Exchange Commission (SEC) on August 1st, eleven people have been charged for their roles in creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme that brought up more than $300 million from millions of retail investors across the globe.
The decentralized finance (DeFi) ecosystem and initial coin offerings (ICOs) have contributed to Ethereum’s growth in a number of ways. The Forsage gifting pyramid scam is one such strategy that cryptocurrency users are now debating.
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In pyramid schemes, which are types of financial fraud, top-level players in a hierarchical network enlist and benefit from a growing base of newly deceived members. On the other hand, a Ponzi scheme often only demands an initial payment from its victims, with promised returns at a later payment date. That is the key distinction between these two scams.
However, using smart contracts that operated on the Ethereum, Tron, and Binance blockchains, Forsage.io was a website that let millions of retail investors transact. It was created in January 2020 by Vladimir Okhotnikov, Jane Doe, a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov.
The working theory of Forsage was that there was nothing to sell. Therefore, the only way to get money is to persuade others to join Forsage.
