SEC issues closure order against Forsage for Ponzi-like scheme

The Securities and Exchange Commission (SEC) has ordered the closure of Forsage and Forsage Philippines, which were found to solicit investments from the public through a crowdfunding platform based on Etheruem blockchain technology.

In an order dated September 17, the corporate regulator mandated to Forsage to stop selling and offering securities in the form of investment contracts, and to refrain from transacting any business involving funds.

The corporate regulator also ordered Forsage to cease its online presence, until it secures the necessary permits to operate.

The order covers Forsage and its operators, representatives, salesmen, and agents including Rich Alex Apuntar, Vhellpoe Forlares Garves, Yuka Kuroyanagi, Christopher Doroliat, Iam Kim, Jairra Fab Teoxon, Mark Nicole Escabarte Valeria, Myra Cris Sapar, Romnick Melanez, and Vel Cabalza.

"Forsage is not registered as a corporation or partnership with the Commission, not has it been issued a secondary license to operate as a broker dealer of securities or issuer of any securities or of mutual funds," the SEC said in an emailed statement.

The SEC also noted that Forsage is not qualified to operate as a crowdfunding entity as it is not duly organized under Philippine laws, nor is it registered with the Bangko Sentral ng Pilipinas (BSP) which has jurisdiction over virtual currencies.

According to the SEC, it found the Forsage —through a scheme posted online — solicited investments under a crowdfunding platform with a smart contract based on Ethereum (ETH) blockchain technology.

Under the scheme, Forsage offers two commission programs or cycle tiers -- Forsage X3 and Forsage X4 -- that promise payouts to investors who invest with a minimum of 0.05 ETH or P600 and a maximum of 51.2 ETH or P600,000.

Both programs have 12 income slots each that an investor may activate, with each slot having endless referral incomes. They promise income through "spillovers" or overflows of referrals gathered by a passive member's sponsor or downline.

"[T]he investment practices of Forsage, if not restrained, will operate as a fraud on investors or to the investing public as it utilizes a 'Ponzi scheme'," the SEC order read.

"In many Ponzi schemes, the perpetrators focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business. It is not an investment strategy but a gullibility scheme, which works only as long as there is an ever increasing number of new investors joining the scheme," it added.—AOL, GMA News