The Philippines Securities and Exchange Commission (SEC) has warned investors against the Forsage, which is the top decentralized application (DApp) based on the Ethreum blockchain. The SEC called the DApp a pyramid scheme. In an announcement, the SEC urged the investors not to use the DApp, and raised questions on its business model, and also ordered the owner to register with the financial watchdog officially. The SEC noted that the operators of the Dapp are engaging in unauthorized investment-taking activities.
The model of Forsage resembles a typical MLM scheme.
Forsage is the highest gas-consuming decentralized application on the Ethreum blockchain. It consumes 25 percent of the total, offering a “fully decentralized matrix marketing project.” The model of Forsage resembles a classic multi-level marketing (MLM) scheme as users make profits by recruiting more users to invest in multi-level “slots.” Each slot is twice as expensive as the previous and returns twice as much profit to the original referrer, just like any typical MLM scheme. The Philippines regulator further noted that the Dapp’s so-called smart contract partakes of the nature of securities through an investment contract where investors need not exert any effort other than to invest or place money in its scheme to make profits.
The SEC issues warning against three unregistered crypto companies
The Philippines SEC had issued a warning to investors to be aware of three cryptocurrency companies that might be a potential scam as they are not registered with the proper financial authorities. The Philippines Securities and Exchange Commission (SEC) flagged three cryptocurrency firms, including Forsage, RCashOnline, and The Saint John of Jerusalem Knights of Malta Foundation of the Philippines, Inc. The SEC noted that none of these three crypto companies have the appropriate licenses or registration requirements in place, leaving investors vulnerable to being scammed.