Two of 11 defendants charged with running a $300 million cryptocurrency-based Ponzi scheme have agreed to settle with the Securities and Exchange Commission.
The case concerns the four founders of a cryptocurrency company called Forsage, as well as a group called the "Crypto Crusaders" who heavily promoted the site. The two defendants who settled, Samuel Ellis and Sarah Theissen, were among this latter group.
The SEC,
The company had previously been served cease-and-desist actions in September 2020 by financial regulators in the Philippines, and again in March 2021 by financial authorities in Montana. Despite this, the defendants denied the claims in YouTube videos and other communications.
"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. "Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains."
Also charged have been the four founders of Forsage — Russian nationals operating in various parts of the world — as well as other members of the promotions team. The investigation into these individuals remains ongoing. Meanwhile, Ellis and Theissen agreed to settle the charges and to be permanently enjoined from future violations of the charged provisions and certain other activity. Additionally, Ellis agreed to pay disgorgement and civil penalties, and Theissen will be required to pay disgorgement and civil penalties as determined by the court. Both settlements are subject to court approval.