While calling the business model of the top decentralized application (DApp) Forsage, a pyramid scheme, the Philippines Securities and Exchange Commission (SEC) cautioned its investors to not use the application.
Forsage Uses Pyramid Scheme
On June 30, the regulatory body warned the investors of Forsage and ordered the owner of the firm to officially register itself with the Philippines watchdog.
Notification released by the SEC stated, “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.”
Forsage consumes 25 percent of the total gas on Ethereum blockchain. This DApp helps its users in providing a fully decentralized matrix marketing project.
The DApp follows the multi-level marketing (MLM) scheme in which the users attract other users so that they could invest in multi-level slots.
It is to be noted that each slot of the scheme two times expensive than the earlier, therefore, the return, users get is twice as much profit to the original one.
The regulator in its notification further mentioned that the smart contract of the Forsage shares the nature of securities via an investment contract which allows the users to invest their fund in its scheme so that they could earn the profit.
Philippines SEC Can Not Ban Forsage Completely
Forsage is a decentralized platform, therefore the authority in the Philippines can not put a complete ban on it. However, the authority is allowed to collect transactional data of the platform and contact every investor individually but this is not only costly but also an ineffective process.
Recently, a DApp ranking website, DappStats, specified that this Ehtereum application, Forsage, is a high-risk.
The authority released a warning for the investors’ stating that they should stop investing in Forsage and in all other companies that have not registered themselves with the authority and the BSP, but still are involved in smart contracts, cryptocurrency and digital asset trading.
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