Bitcoin, Ethereum and Cryptocurrency Ponzi Schemes (Is Forsage a Scam?)

Bitcoin, Ethereum and Cryptocurrency Ponzi Schemes (Is Forsage a Scam?)

As a Financial Literacy advocate, I received questions and messages regarding a new investment scheme roaming around social media and the internet. I've seen a lot of people 'investing' in a crypto-app and most of them don't know how these market works.

Investing in cryptocurrency such as Bitcoin and Ethereum is one of the most profitable investment opportunities available in the world today. BUT there are also numerous scams or fraud associated with Bitcoin, Ethereum and other cryptocurrencies.

In this article we'll take a look at the most recent one in the limelight, FORSAGE and other scams associated with cryptocurrencies and how to avoid falling victim to such scams.

Recommended Read: What about Bitcoins?

What is a Ponzi Scheme?

“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. Both Ponzi schemes and pyramid schemes eventually bottom out when the flood of new investors dries up and there isn’t enough money to go around. At that point, the schemes unravel.”
— Investopedia

Why Cryptocurrency is used in scams?

Cryptocurrencies, Bitcoin, Ethereum, smart contracts and the like enable a perfect breeding ground for a new wave of fraudsters. While traditional financial scammers have to worry about the law, government regulation agencies, 3rd party institutions and their public image to worry about, cryptos don’t have the same issue. There is no central authority that can shut the smart contract down. Because of security claims, investors may develop a false sense of trust.

Recommended Reading: Technology Enabled Investing

Crypto Mining Scams

This is one of the top scams out there that takes advantage of newbies. Mining is usually done using some complex device or software which are dedicated to confirm crypto transactions. For every transaction confirmed, there is an amount of cryptocurrency allocated to the miner. So, the bigger the volume, the bigger the mining %fee distributed to all who confirmed the transaction.

Miners seeking to make things efficient, resort to crowdfunding or ask others to invest with them and investors will get a percentage profit on their investments weekly or monthly. This is what scammers capitalize on by making a website that claims to be cryptocurrency miner. They ask you to invest with them by sending either your money or an equivalent amount in other types of cryptocurrency.

After that, you will not hear from them again or suddenly disappear or shutdown their website or operations. Conduct your due diligence and read reviews about mining companies before investing.

Recommended Read: Initial Coin Offering (ICO) bubble?

Fake Initial Coin Offerings (ICOs)

ICO or Initial Coin Offering is a method of making money by using cryptocurrencies. It is an alternative method to raise funds and is mostly used in projects that have not yet fully developed their blockchain platform, service or product.

The problem arises from many fake ICOs that do not have a real product or are not even a cryptocurrency company. Similar to the previous example, they are either scammers or criminals who set-up a website, claim to launch a new innovative, ground breaking cryptocurrency that solves a problem and are pre-selling their tokens.

And after they have collected enough cash or other cryptocurrencies, they disappear and then you are suddenly left with a useless token/coin that you cannot even convert to other listed cryptocurrencies.

One way to avoid this is through prior research. Check the website owner's details, the team behind the initiative (if they have pictures and public social profiles: Twitter, Facebook, LinkedIn - they could also be fake people). If there is no team or verifiable information, then be careful or stay away from them.

Recommended Reading: ICOs remain risky ventures in 2019, here’s why

Crypto Account Management Scams

Just like stocks, FX, and the like financial instruments, trading crypto requires an account in crypto-exchangers to buy and sell cryptocurrencies. Like any other financial instrument, this requires some level of skills and expertise to execute trades in order to gain profits. For this reason, some experts or pretending to be experts take/crowdfund from the public to invest more funds and allegedly split the revenue 60-40, 70-30 or the like.

From our previous examples, scammers can also operate in this space, take your money and run away with it leaving you with nothing. One way to avoid this is to study the cryptocurrencies, systems, industries and gain experience over time. Another way is to copy-trade from suggested trades, but that also has it's own risk for pump-and-dump schemes.

Cryptocurrency passive income growth or doubling scams

The typical approach for this is that scammers usually choose to implement this via social platforms (messaging apps, social media) and entice or invite unsuspecting people. The spiel starts with a beautiful story of adversity, fated opportunity of how someone invested, took a risk, a leap of faith in this 'crypto-system' which doubled within an hour, a day or two, or even within weeks!

This is accompanied with proof of income (stacks of real money) or screenshot from the crypto app showing the gains and add to that other sales tactics (scarcity, urgency, exclusivity) for you to invest with them. Anyone who promises to double or increase your investments or any other cryptocurrency is just trying to lure you to send your money or your coin so they can grow theirs.

What is Forsage?

Forsage is an Ethereum based cash gifting scheme which uses a matrix cycler program (or so they claim), to automate the position cycling in the matrices, to pay members wallets.

"The First Ever 100% decentralized international crowdfunding – The new generation platform. Revolutionary Smart Contract* technology provides decentralized market participants with the ability to directly engage in personal and business transactions. The Forsage Decentralized Matrix Project’s Smart Contract is publicly and perpetually available to view on the Ethereum Blockchain."

- Forsage has two matrix sizes which are 3×1 and 2×2.

- Forsage x3: A 3×1 matrix has three positions under your main position.
- Forsage x4: A 2×2 matrix starts with two positions on the level 1 and expands to four positions on level 2.

"Positions in the matrices are filled via direct and indirect recruitment of Forsage affiliates." 

I won't go into the technical "functionalities" of it all since this compensation plan already says it all. The technical description is like a distraction for the uninitiated at this point. Is Forsage a Scam? YES! If that doesn't look like a pyramid recruitment to you then I really don't know what to tell you.

How the Crypto Ponzi Works

The pyramid Ponzi scheme is exactly what you’d expect: one owner (or team leader) at the top with, let’s say, 5 investors below. Each investor is incentivized to get the minimum or more investors below them, and so on until it can no longer continue.

The investors at the top of the pyramid make money by bringing in new investors to pay back their original investment, and then some. Every time a new layer is added, everyone already in the pyramid makes loads of money or "gifted" with money.

The Red Flags

Still not convinced after reading all that eh?
  • The project Forsage has no admin. But think about it, isn't the default admin the creator/s? Duh.
  • Forsage has no retailable products or services, with affiliates only able to market Forsage affiliate membership itself (a.k.a recruitment).
  • Non hierarchically organized - They just reinterpreted it because they used the term 'matrix', the compensation plan obviously has a hierarchy.
  • Use of Buzzwords. Do you really know what the following means? - Immutability, peer-to-peer payments, decentralized, smart contract, transparency and anonymity..blah, bla, bluh
  • Zero risk factors - HAHAHHAHA, from what I saw in social media, the endorsers will claim that if you don't want to risk your money then don't! HAHAHAH zero-risk my butt.
This is the same thing over and over again, they just substituted 'recruitment' with 'membership' or 'affiliates'.

No such thing as guaranteed gains or investments

If you really want to invest, study how these market works. Ethereum is legitimate but you don't need to join to any company in order to buy ETH. All you have to do is to find a credible business that can give you an opportunity to create a digital wallet. Learn and understand how crypto-trading woks or get a legitimate/trusted broker to execute your trades.

In the Philippines we have Coins.Ph. From there, you can deposit your Peso/Fiat money and convert to Ethereum then convert it back when the exchange rate is rising enough for you to make profit (minus the charges/expenses).


Forsage is the word on everyone’s lips at the moment, and it’s easy to get caught up in hope, and excitement for easy money. This is just simply a money game until the trend dies out and there will be desperate people who will lose money.

Whoever created the site will benefit the most. MLM gifting schemes primarily benefit those who run them and top recruiters.

Please stop joining those fixed-earning crypto groups. There is no such thing as guaranteed earnings or interest in crypto--that's like telling people you will always win in a casino.

Enough with the 'Pamasin' (risk it for the biscuit) Mindset and sharing the so-called opportunity to others despite knowing that it is likely a scam and you are just 'riding the trend'. Not only are you at risk of losing money, you may also lose your reputation as well as friendships. Not only are you promoting fraud but also you participate in it.

Once again, if you want to get into it stocks, FX or crypto, then learn to trade and everything else that comes with it. Trading is a skill. Most of your best bets come with experience, data, research and with time in the market.

Investing in yourself first, embrace hard work and consistent long term investments are three things that anyone can do as these have been tried and tested.

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Bitcoin, Ethereum and Cryptocurrency Ponzi Schemes (Is Forsage a Scam?) Bitcoin, Ethereum and Cryptocurrency Ponzi Schemes (Is Forsage a Scam?) Reviewed by Vernon Joseph Go on Tuesday, June 30, 2020 Rating: 5

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