Is Forsage real or a scam? The name will likely pop up on your radar if you’ve been surfing the blockchain and DeFi streets. You may have read or heard about it, but let’s discuss Forsage.
Claimed to be an investment platform in the decentralised finance space, Forsage went big in its marketing efforts, making a convincing proposition of what it is and does. Regardless, there have been some controversies surrounding the project.
In this article, we’ll discuss Forsage and decide whether it’s a scam or legit.
Which do you think it is? Let’s see if you’re right.
What is Forsage?
Forsage was paraded as a smart contract for developing a blockchain-powered businesses. On the company page, Forsage says it is a new decentralised platform acting as a bridge between investors across the globe.
Founded and launched in January 2020, the platform started operations on the Ethereum blockchain as a network marketing business. After a while, it expanded to Tron and Binance Smart Chain.
Information on the platform states that it expanded operations to Tron because of its minimal transaction fees and high speed. Then, it leverages the stability of the BUSD stablecoin, ensuring that its users earn their income and keep it regardless of the market situation.
Nobody identifies as the owner. There’s also no mention of any staff or admin on the website. According to the information on the platform’s support page, Forsage is a smart contract that operates independently of anyone.
Forsage’s mode of operation resembles that of a pyramid scheme. The platform runs a network-based model, so users get to recruit new users under them. For the Forsage X3, a user must recruit three new users. The network pays a new recruit as soon as they recruit new users to fill the slots under them.
How Forsage Uses Smart Contracts
The Forsage platform is built with smart contracts. The smart contract is programmed to make immediate transfers as soon as a new user sends crypto.
When a participant recruits new team members, the members have to invest to start earning, too. Whatever they invest will be sent to the original participant who recruited them. The Forsage smart contract automatically carries out these transactions.
Marketing and Operational Structure
Source: Bitcoin.com
Forsage launched a serious marketing campaign portraying the platform as a matrix project. When participants join, the platform places them under the partners that recruited them. There are four marketing programs with varying levels of profitability.
Participants only need to fill the slots in any or all the programs they choose. The more you fill your slots with new participants, the more income you make.
You can find a statement on the website that arouses suspicion if considered carefully. It says, “Forsage marketing is built so that income from one cycle is enough to activate the next level. As soon as all the spots in the level are filled, a new cycle automatically begins.”
These structures are reminiscent of a Ponzi scheme, but the platform claimed it wasn’t a scheme.
Global Impact and Lawsuits: SEC Swoops In
Forsage ran the program for about two years and garnered about $300 million in investments.
In Aug 2022, a press release by the Securities and Exchange Commission, SEC, reported that the body indicted eleven people for creating and marketing Forsage. Among these eleven are four founders of Russian nationality and others who were primary promoters of the pyramid scheme.
Three promoters were people the founders employed and were based in the US. The others are members of a huge group of promoters or marketers for the scheme.
SEC identified the Forsage scheme founders as Vladimir Okhotnikov, Sergey Maslakov, Olene Oblamska and Mikhail Sergeev. One could ask why the founders wanted to remain anonymous if the scheme was legitimate, as they claimed.
The amount of money this scheme amassed from investors worldwide totals $300 – $340 million. Considering that the platform relied entirely on funds from new investors to pay older ones, we can say the SEC and the US government’s Crime Department have a strong case.
Is Forsage a Scam or Not?
We outrightly agree that the Forsage platform or business is a scam, a Ponzi scheme that has ripped people off of their money. The following are reasons or considerations that helped us arrive at this conclusion.
- The US Securities and Exchange Commission (SEC) has charged them with fraud of a Ponzi scheme. That’s enough to strike this entire article and say the platform is a properly structured crypto scam.
- The founders chose to remain anonymous to be untraceable if any issue arose. That raises enough suspicion.
- The business ran a pyramid structure – network marketing. This means that every user is a promoter on some level because they have to get new participants.
- Users only earn when they recruit new participants. That is the most obvious sign of a Ponzi scheme.
- The business built a smart contract that automatically transfers funds from new investors into old investors’ wallets. No one can tamper with the code to change it.
- The website is well structured.
These are the reasons we have boldly asserted that the Forsage platform/business is a scam.
Conclusion
Forsage started in January 2020 with claims of being a network marketing business. The promoters were aggressive with their marketing on social media platforms, and investors from all over the world joined the network. But in August 2022, the SEC indicted the company with fraud charges. This is the most substantial proof that the platform is a scam.
Forsage played a strong game by using smart contracts to show transparency and make the investment process seamless for its users. However, if you’re familiar with the primary signs of a Ponzi scheme, you would recognise this platform for what it is.
While investing in crypto, be careful not to dabble into opportunities that are difficult to understand. Do your due diligence and learn the signs of a fraudulent scheme like a pyramid scheme. When in doubt, do not invest at all.
