THE SECURITIES and Exchange Commission (SEC) has ordered another entity to stop soliciting investments from the public for its failure to secure the necessary requirements.
In its September 17 order,t he SEC said Forsage and Forsage Philippines, which was allegedly securing investment from crowdfunding based on Ethereum blockchain technology, must stop its activity “”the requisite permits are duly issued.”
It also directed Forsage to “refrain from transacting any business involving funds in its depository banks, and from transferring, disposing, or conveying in any manner all related assets to ensure the preservation of the assets of the investors” as the order also covered anybody involved in its activities including Rich Alex Apuntar, Vhellpoe Forlares Garves, Yuka Kuroyanagi, Christopher Doroliat, Iam Kim, Jairra Fab Teoxon, Mark Nicole Escabarte Valeria, Myra Cris Sapar, Romnick Melañez, and Vel Cabalza.
The agency came out with the order after an investigation which showed that the entity was soliciting investments from the public using a website and social networking sites as it offered its clients two commission programs that promised of payouts to investors for a minimum investment of P600 and a maximum capital of P600,000.
Each of the programs provides 12 income slots that an investor can “activate” from referrals and spillovers, or income that he or she will get from the income of a sponsor or downline.
The agency said the “scheme involves the sale/offer of securities to the public in the form of investment contracts, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.”
This scheme violates Section 8 of Republic Act No. 8799, or The Securities Regulation Code, as the entity did not allegedly have registration from the agency that would have legally allowed to engage in its activity.
“Forsage is not registered as a corporation or partnership with the Commission, nor has it been issued a secondary license to operate as a broker dealer of securities or issuer of any securities or of mutual funds,” and that it was not “qualified to operate as a crowdfunding entity in the country as it must be duly organized under Philippine laws or must be a Filipino natural person, in view of SEC Memorandum Circular No. 14, Series of 2019.”
It did not also secured a registration from the Bangko Sentral ng Pilipinas (BSP), a requirement for those that would engage in virtual currency activities.
On June 30, the SEC released an advisory warning the public to stop investing in its schemes, but the agency found out that the entity continued with its activities in soliciting investment from the public as it tried to ddiscredit the advisory by misleading information saying it was beyond the jurisdiction of the agency.
“[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.
It said that the claim of the entity that “it is decentralized and is not subject to any government restriction and control is baseless.”
“A profit making venture such as Forsage which utilizes smart contracts in selling or offering securities in the nature of investment contracts is required to be registered with the Commission which regulates public offering or sale of securities within the Philippines,” the order read.
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