The Securities and Exchange Commission (SEC) has recently issued an advisory (as seen below) on Forsage, warning the public of the individuals and groups involved in such activities. The advisory defines the activities behind the scheme, and advises the public to not to invest or stop investing in any investment scheme offered by the said entity, its representatives or any entities engaged in schemes which promises ridiculous rates of return with little or no risks.
In support of this view, Coins.ph does not endorse or is affiliated in any way with such activities or products. Moreover, we have a zero tolerance policy on fraudulent activities and potentially scamming practices. In a separate article, we have enumerated tips on how you can avoid investment schemes and other online scams. We urge our customers to be extra diligent with their funds and to act within our User Agreement.
Based on numerous reports and information gathered by the Commission, the entity operating under the name FORSAGE, headed by LADO OKHOTNIKOV, is found to be engaged in investment-taking activities in the Philippines which is NOT AUTHORIZED by the Commission.
Operators of FORSAGE asserts that its program is designed as a Crowdfunding International Platform or a Smart Contract Crypto Earning Program based on the Ethereum blockchain technology which apparently provides a longterm active and passive income to investors through its crowdfunding referral system that appears to be a secured, scam--free, and inexpensive investment yet assuring a lucrative return with little or no risk.
FORSAGE claims that its program will continue to function even if its website “www.forsage.io” is closed for any reason. It even implied that the Government cannot shut it down because it is decentralized and thus free from any authority.
As posted online, FORSAGE offers Twelve (12) investment slot packages or levels for its Two (2) Commission Payout Systems or Compensation Plans referred as the “X3” and “X4 Partner income” with a minimum investment of 0.05 ETH or at least Six Hundred Pesos (Php 600.00) to a maximum of 51.2 ETH or almost Six Hundred Thousand Pesos (Php 600,000.00) depending on the chosen slot/s. To wit:
Notably, each slot is twice more expensive than the previous one and accordingly promises an income or profit which is twice as high as well. As posted:
FORSAGE states that each investment slot under the X3 and X4 plans all have endless referral cycles. Therefore, the potential income therefrom seems to be boundless.
With regard to X3, each cycle requires Three (3) referrals. The membership fees from first Two (2) referrals shall be automatically paid to the referring member’s account while the Third referral’s membership fee shall be considered as a “Re-entry fee” to the system which shall then be awarded to the referring member’s sponsor or upline account. To show:
Anent the X4, it needs Six (6) referrals to complete the cycle. The membership fees for the first Two (2) referrals shall be automatically awarded to the Sponsor account while the Third until the Fifth referral shall be paid to the referring member’s account and the Sixth and final referral for the loop shall again be considered as a “re-entry fee” to the system. To illustrate:
In addition, “Spillovers” or overflows of referrals from either the referring member’s sponsor and/or downlines are also permitted in order to assist passive investors to complete their cycles.
Basically, the active income generated from the foregoing compensation plans depends on the number of referrals and/or membership fees gathered while passive income is acquired through spillovers. Hence, the more people that will be referred to FORSAGE’s system, the more likely that its members will earn income thereto either actively or passively which ultimately defeats its claim of sustainability because its whole system depends entirely on the new investors that will be lured in.
Based on the foregoing, FORSAGE’s so-called smart contract partakes of the nature of securities through an investment contract where their investors need not exert any effort other than to invest or place money in its scheme in order to earn profit.
Briefly, an “investment contract” exists when there is an investment or placement of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others which prominent on FORSAGE’s scheme.
Therefore, FORSAGE must be duly registered with the Commission and that any person or entity intending to offer and sell its investment contract are required to secure the necessary registration and/or license from the Commission as well.
However, per our record, FORSAGE is NOT REGISTERED with the Commission and OPERATES WITHOUT THE NECESSARY LICENSE AND/OR AUTHORITY to solicit, accept or take investments/placements from the public nor to issue investment contracts and other forms of securities defined under Section 3 of the Securities Regulation Code (SRC). FORSAGE is also NOT REGISTERED either as a crowdfunding intermediary or a funding portal under SEC Memorandum Circular No. 14, Series of 2019 or the Rules and Regulations Governing Crowdfunding.
Likewise, its name DOES NOT APPEAR among the registered banks, exchanges or companies engaged in digital assets with the Bangko Sentral ng Pilipinas (BSP) in accordance with the GUIDELINES FOR VIRTUAL CURRENCY EXCHANGES (BSP CIRCULAR NO. 944) which requires all entities engaged in Virtual Currencies in the Philippines to obtain a Certificate of Registration to operate as remittance and transfer company pursuant to the BSP rules and regulations.
Moreover, the said scheme employed by FORSAGE clearly shows indication of a possible Ponzi Scheme where monies from new investors are used in paying “fake profits” to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors.
Hence, the public is advised NOT TO INVEST or STOP INVESTING in any scheme offered by FORSAGE or such other entities engaged in smart contracts, cryptocurrencies and digital asset trading that are not registered with the Commission and the BSP.
The public is again reminded that investing in such an unregulated entity lacks investor protection because it is not covered by prudential and market conduct requirements applicable to licensed and authorized operations.
Accordingly, the Commission warns all unscrupulous individuals and/or entities that strict penalties are imposed for violations of the Securities Regulation Code, the Revised Corporation Code, and such other rules and regulation enforced by the Commission.
Those who act as salesmen, brokers, dealers or agents of such unauthorized entities like the operators of the FB Page FORSAGE PHILIPPINES and FORSAGE SMART CONTRACTS in selling or convincing people to invest in their investment scheme offered including solicitations and recruitment through the internet may likewise be criminally prosecuted and penalized with a maximum fine of Five Million pesos (P5,000,000.00) or a penalty of Twenty-one (21) years of imprisonment or both pursuant to Sections 28 and 73 of the SRC.
In the same manner, those who invite or recruit others to join or invest in such venture or offer investment contracts or securities to the public similar to CHRISTOPHER DOROLIAT and the operators of the FORSAGE PH and THINK WISE CHANNEL, may incur criminally liability, or otherwise be sanctioned or penalized accordingly as held by the Supreme Court in the case of SEC vs. Oudine Santos (G.R. No. 195542, 19 March 2014).
The names of all those involved will also be reported to the Bureau of Internal Revenue (BIR) so that the appropriate penalties and/or taxes be assessed correspondingly.
Apart thereof, the Bayanihan to Heal as One Act (Republic Act No. 11469) also punishes those participating in cyber incidents that make use or take advantage of the current crisis situation to prey on the public through scams, phishing, fraudulent emails, or other similar acts during the term of its effectivity.
Again, it must be noted that the above laws are not aimed to hinder or pose significant risk to businesses and cryptocurrency projects but are intended for the protection of both the registered entities and the investing public from any anomalies and/or irregularities which tend to result from any unlawful or unauthorized operations.
Should you have any information regarding any investment solicitation activity by any individual or group of individuals representing FORSAGE, please send your report to the EIPD at email@example.com.
For the guidance of the public.
Pasay City, 30 June 2020.