Accointing Weekly Crypto News

Accointing Weekly: August 5

Our weekly crypto newsletter is here! Learn more about the taxing side of crypto, SEC’s attempts to bring crypto Ponzi scheme founders before the Court, and how to avoid crypto scams.

The Taxing Side of Crypto

When it comes to regulation, the crypto ecosystem is still a long way off from the world of traditional finance. However, as the demand for crypto tax solutions grows, CPAs and accounting firms find themselves in a great position to build support for their clients. 

So, what can accountants do to get ahead or at least stay in step with this technological shift? And how do Bitcoin, blockchain technology, and smart contracts disrupt the accounting process? These questions are some of many that our US, UK, and Australia tax expert David Canedo sat down to answer in a recent interview with journalist Sonia Dumas.

Covering many topics, they addressed the problems accountants face when dealing with crypto, the intricacies of DeFi and tax, and what the future may look like. You can listen to the full interview here.

Fraud Charges for Promoters of Forsage Ponzi Scheme

The SEC charged around eleven people this Monday due to the alleged $300 million crypto Ponzi scheme Forsage. The platform was launched in 2020 and quickly became a popular decentralized app on the Ethereum blockchain.

Forsage called itself a “smart contract” crypto earnings platform to provide “limitless possibilities of the new economic-financial system.” Yet, the only way for investors to earn profits was by recruiting others into the scheme. The group used assets from new investors to pay old investors – a textbook example of a Ponzi scheme. Users were told to send money via multiple networks such as Ethereum, Tron, and Binance to receive a payout directly to their wallet as soon as they recruited more investors. Since the funds never got reinvested into new protocols or utility projects, the founders eventually replicated this principle by trying to get more people into the platform. Finally, the project lost all liquidity as early investors withdrew their “profits.”

Even though the project got a cease-and-desist action by the SEC equivalent in September 2020, the founders of Forsage continued to promote the alleged scam for several months. Millions of users were recruited worldwide, using crypto influencers and reputable crypto communities. The owners of the group Sarah Thiessen, Carlos Martinez, Ronald Deering, Cheri Beth Bowen, Alisha Shepperd, and the crypto influencer Mark Hamlin, who all engaged directly in promoting the Forsage scheme, got charged with fraud and offering and sale of unregistered securities. The SEC lawsuit seeks justice for those affected by the scheme and civil penalties for the remaining promoters and the four founders.

Crypto 101: Crypto Scams and How to Avoid Them

Cryptocurrencies have disrupted the status quo and changed how most people view investing, financial services, gaming, and entertainment. Some have even turned their life around by investing in the right token at the right time and managing to keep most of the gains. However, the polar opposite also exists – many have lost everything to crypto. And it’s not just because they misjudged the market. Crypto scams have been around since crypto was invented and will continue to exist in this space quite possibly forever. From fake websites and fraudulent whitepapers to rug pulls and scam tokens with no utility, many crypto scams are difficult to spot.

Make sure you’re properly informed before risking your hard-earned money! Read our Crypto Scams Watchout article and learn how to recognize legitimate projects from the scams out there.

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