SEC charges 11 people in $300M crypto pyramid scheme | Big Indy News
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SEC charges 11 people in $300M crypto pyramid scheme



The Securities and Exchange Commission said on Monday it charged 11 people for their roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme that raised over $300 million from retail investors worldwide, including in the United States.

Those charged included the four founders behind the scheme, named Forsage. They were last known to be living in Russia, the Republic of Georgia and Indonesia, the SEC said in a statement.

The charged individuals could not immediately be reached for comment.

According to the SEC’s complaint, the scheme’s website was launched in January 2020 and allowed millions of retail investors to enter into transactions via smart contracts. It allegedly operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme, the SEC said.

Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure, the SEC complaint added.

Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure, the SEC said.
CQ-Roll Call, Inc via Getty Imag

“Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” said Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber unit. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”

Without admitting or denying the allegations, two of the defendants agreed to settle the charges and one of them agreed to pay penalties, the SEC said.

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Could Biden’s Climate Agenda Trigger a New Trade War?



Europe is growing hot over the Biden administration’s Inflation Reduction Act, with opposition to the sweeping climate and economic bill dominating the U.S.-EU Trade and Technology Council talks this week. Some analysts fear the disagreement could thrust two of the world’s biggest trading partners into a new economic war.

At issue is a portion of the law that offers $369 billion in subsidies and tax breaks to companies that develop green technologies — from electric vehicles and their components to solar panels and renewable energy equipment — in North America.

Brussels fears the I.R.A. gives American companies an unfair advantage. Last week, President Emmanuel Macron of France warned President Biden that any trade imbalance caused by the climate law, along with the CHIPS Act that is meant to bolster American semiconductor manufacturing, could drive a wedge between the allies. On Sunday, Ursula von der Leyen, the president of the E.U.’s executive arm, said that Europe could retaliate with subsidies of its own to avoid losing manufacturing business to the United States. (The Swedish electric vehicle battery maker Northvolt, for example, said it would use an I.R.A. subsidy to relocate some production to the U.S.)

The subsidies have become a central talking point at the Trade and Technology Council. On Monday, the E.U.’s trade commissioner, Valdis Dombrovskis, and the U.S. Secretary of State Antony Blinken said the two sides had discussed the future of U.S. industrial policy around climate, but announced no compromises. Last week, at the DealBook Summit, Treasury Secretary Janet Yellen told Andrew that she’d like to see the I.R.A. bring America’s trading allies closer together by, for example, building “adequate supply chains” around the rare raw materials needed by green technologies. “That is a form of ‘friendshoring,’” Ms. Yellen said.

Europe doesn’t have many options. If a negotiated solution fails, some European lawmakers have called for a formal complaint to the World Trade Organization. But because of inaction by the U.S., the trade organization’s appellate body, its main dispute-resolution function, has been in limbo for years.

“There’s potential for this to escalate into a larger conflict,” Niclas Poitiers, a research fellow specializing in international trade at Bruegel, a Brussels-based think tank, told DealBook. “How do you avoid that?”

Poitiers said that competing climate subsidies from the E.U. were unlikely, and the chances of establishing a carve-out in the U.S. law to create a kind of “green” free-trade agreement were remote. That could mean new tariff threats — and a return to the strained relations of the Trump presidency, when each side imposed billions in levies on products ranging from industrial metals to European spirits to Harley-Davidson motorcycles.

“If things really sour, you might see some kind of retaliatory tariffs,” Mr. Poitiers said. “But I don’t think this is anyone’s preferred objective.”

Restaurant groups escalate their fight against a California law on fast-food workers. An industry coalition said it has collected enough voter signatures to move forward with a ballot initiative seeking to block a state law setting minimum hourly wages. The measure could go up for a vote in 2024.

Meta threatens to remove news from its U.S. platform. The parent company of Facebook floated the possibility as lawmakers consider a bill that would make tech giants pay to carry news content on their platforms. It had a similar battle in Australia, against a plan championed by News Corp., and there it ultimately agreed to pay.

The jury is out in the Trump Organization’s criminal tax fraud trial. Jurors are debating charges by the Manhattan district attorney that the Trump family business evaded taxes on lavish executive perks. Meanwhile, the D.A.’s office has hired Matthew Colangelo, a former Justice Department prosecutor, to help lead another investigation into Donald Trump.

PepsiCo plans to lay off hundreds. The beverage and snack giant will cut jobs at its North American headquarters, the latest sign that a wave of belt-tightening in the face of a worsening economy is expanding beyond tech and media companies.

Nike cuts ties with Kyrie Irving. The sneaker giant formally ended its relationship with the pro basketball player, having suspended it a month after ago after he posted a social media link to an antisemitic film. Nike’s move also echoes one by Adidas, which dropped Ye, the rapper and designer formerly known as Kanye West, after he made antisemitic remarks.

Circle, the cryptocurrency company behind one of the market’s biggest stablecoins, said on Monday that it had called off its effort to go public via a merger with a blank-check fund, or SPAC. The about-face represents the intersection of two once-popular investing trends that have hit hard times.

Circle was up against a Dec. 10 deadline to get its deal done, but it hadn’t received approval from the S.E.C. more than a year after announcing the merger. Circle and its SPAC partner, Concord Acquisition Corp., revised their initial July 2021 agreement in February, doubling its valuation of the crypto company to $9 billion from $4.5 billion.

SPACs have had a rough time of late, with nearly 60 liquidating so far this year after being unable to complete a deal, according to SPAC Research. And crypto, of course, has been reeling since the collapse of the exchange FTX. (Circle, which runs the USD Coin, said it has minimal exposure to FTX.)

Circle still wants to go public, at some point. The company said its finances are healthy — it earned $43 million in the third quarter — and its C.E.O., Jeremy Allaire, tweeted that the crypto industry was “going to decisively leave the speculative value phase” toward a more stable and enduring one.

More crypto news:

  • Ordinary investors are wondering how to recover financially from the crypto plunge.

  • Nexo, a crypto lender, said it would leave the U.S. market after failing to reach agreements with state and national regulators.

  • Britain is finalizing sweeping regulations of the crypto industry, including how to handle the collapse of service providers and restrictions on advertising.

  • Swyftx is the latest crypto exchange to lay off staff, warning that trading volumes could sink again next year.

Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of leading-edge computer chips, will announce on Tuesday that it plans to drastically expand and revamp its factory in Arizona.

The $40 billion initiative — significant enough that President Biden and Tim Cook, Apple’s C.E.O., will attend a celebration of the announcement — is the latest sign that the business world is trying to reduce the risks that China poses to global supply chains.

The news is a win for Mr. Biden, who has made sophisticated semiconductor manufacturing in America a key part of his industrial and national security policy. His administration pushed for measures like the CHIPS Act to motivate companies to build U.S. facilities. “This announcement by TSMC is historic in every way,” Ronnie Chatterji, an acting deputy director of the National Economic Council, told The Times.

Left unmentioned publicly was another consideration: China’s increasing aggression against Taiwan, which analysts worry could add another choke point in an already fragile supply chain.

TSMC could eventually produce chips for iPhones in the U.S., after the company upgrades the two-year-old factory in Phoenix and builds a second facility in the state. The two American plants may ultimately produce only a fraction of what TSMC can make in Taiwan, but experts say they could provide an essential backstop for American tech customers in case of manufacturing emergencies.

Laura Murphy, a professor of human rights and contemporary slavery at Britain’s Sheffield Hallam University, on a new report that shows the global auto sector is highly reliant upon Chinese suppliers that researchers found to have participated in coercive labor programs in Xinjiang Province.

In late September, Marc Benioff was asked if his business software company, Salesforce, would continue its aggressive acquisition strategy even as corporate I.T. spending slumped. The C.E.O. confidently replied, “It seems to be working.” Less than three months later, Wall Street is worrying he may have missed the signs of a downturn.

Salesforce’s shares slumped 7 percent on Monday on news that one of its recent acquisitions, the workplace communication platform Slack, is losing a key asset: its C.E.O., Stewart Butterfield. He launched the business in 2013; Salesforce bought it last year for $27.7 billion.

Mr. Butterfield’s departure was expected, and had been in the works for months, the company said. But investors still seemed disturbed by the news. The company’s stock now has dropped nearly in half this year.

Even by the standards of Big Tech, Salesforces has been hit by a large exodus of key executives:

  • Dec. 2: Mark Carter, a top cybersecurity executive.

  • Dec. 1: Mark Nelson, head of Tableau, which Salesforce acquired in 2019.

  • Nov. 30: Bret Taylor, Salesforce’s co-C.E.O. (He plans to leave in January, and he’d only been in the role just over a year.)

  • Nov. 10: Gavin Patterson, chief strategy officer.

Salesforce has spent $50 billion on acquisitions since 2018. Those deals have kept sales rising quickly, but recent integration costs have sapped the firm’s bottom-line growth. It’s also attracted the activist hedge fund Starboard, which thinks Salesforce could improve its profit margins.

Slack was Salesforce’s largest-ever purchase. When the deal was struck, other pandemic investment plays, like Peloton and Zoom, were soaring. Now Salesforce looks like it might have overpaid.

And now Mr. Benioff and his team will have to run Slack themselves. Along with Butterfield, a number of other top Slack executives are leaving as well. Mr. Benioff on Monday named a Salesforce executive to run the brand. “Salesforce’s history of acquisitions could present a high degree of execution risk,” Bank of America analyst Brad Sills warned investors in a recent note to clients.


  • Microsoft proposed making the “Call of Duty” video-game franchise available to Sony’s PlayStation for at least 10 years, as part of efforts to win regulatory approval for its $69 billion takeover of Activision Blizzard. (CNBC)

  • An array of SPACs have disclosed accounting weaknesses, giving critics more ammo for warnings about the risks of these blank-check funds. (FT)

  • Inside Blackstone’s decision to block withdrawals from its $125 billion real estate investment fund. (FT)


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Is Boris really the emissary that blockchain needs right now?



With FTX in tatters, bitcoin in abeyance and the entire fundament of crypto finance in doubt, the technology of blockchain was badly in want of an image boost. What the distributed ledger technology needed, Singapore decided, was the rhetorical skills of former UK prime minister Boris Johnson to burnish its battered image, and here he was at a glittering gathering of the blockchain industry in a five-star hotel last week.

Blockchain in particular and innovation in general, Johnson explained, is always scary at first. “Humanity has been paranoid about this since the Titan Prometheus gave us the first flame,” he said, mixing classical reference and technological detail.

Johnson was giving the keynote speech for the International Symposium on Blockchain Advancements to 80 or so crypto enthusiasts who had braved Singapore’s tropical thundery showers to hear his insights. It felt a fitting location for the event in the same week that Singapore’s state-owned fund Temasek was facing scrutiny for ploughing $275mn into the collapsed crypto exchange FTX after eight-months of due diligence failed to flag up any big concerns. It is clear there was never enough paranoia or fear, one nonplussed conference-goer said after an hour of Johnson’s musings on Brexit, Australian submarines and his time at the Telegraph.

Beyond the free canapés and macarons, the event was hard to read as anything other than a plea from the blockchain industry to be taken seriously. Every sector is entitled to seek the endorsement of disgraced former leaders at times, but Johnson’s paeans of praise for Singapore Slings and his room at the famously expensive Raffles Hotel, delivered alongside his lauding of the potential of blockchain to a half-filled ballroom of men in suits, unsurprisingly was not the panacea for its woes.

One delegate, who gave his name as Kai and said he worked at a local crypto custodian start-up, was excited that someone “so famous” was speaking. What about Johnson’s position on digital currencies and the potential of blockchain? “Oh I don’t know about that,” Kai said with a nervous laugh.

A rare female attendee admitted that she was actually a journalist mainly trying to find out how much Johnson was being paid to headline the conference.

Against this backdrop, Britain’s former prime minister jovially assured the room of “blockchain pioneers” that they were in the right place, going on to remind his audience that technology is “morally neutral”. He dwelt at length on how doctors erroneously claimed in the early days of the railways that the rattling and jolting of trains was likely to cause sexual excitement, why the City of London is “the most productive place on Earth”, and something unclear about nuclear-powered vacuum cleaners. But it was not obvious how these digressions would bolster his case for blockchain.

He did eventually circle back to the technology and cryptocurrencies. He said he has “seen some pretty shocking headlines about this whole venture and we need some way of holding people to account”. But no sooner had he raised the subject of recent events in the cryptosphere than he moved swiftly on to topics closer to his heart: Brexit, the Ukraine war and green technology.

Then came his finale. “I will make a strong argument that the UK will become even more attractive as a place to invest once we deliver on all that Brexit stuff.” On blockchain, he added, he could not comment further without more details.

The blockchain enthusiasts seemed less than enthused. Someone showed enough interest to snap a photo only to be admonished by a man who rushed over hissing there was to be no photography.

The interviewer tried valiantly to bring Johnson back to blockchain. What was his overall message for innovators in the industry? “Apart from Singapore, which is a fantastic place for innovation, come to London. Come to the UK . . . It’s a fantastic country . . . it rains more in Rome by the way,” he replied. “I look forward to watching the progress of the blockchain industry with fascination,” he added to bemused applause.

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If There Is a ‘Male Malaise’ With Work, Could One Answer Be at Sea?



Before dawn on a recent day in the port of Seattle, dense autumn fog hugged Puget Sound and ship-to-shore container cranes hovered over the docks like industrial sentinels. Under the dim glimmer of orange floodlights, the crew of the tugboat Millennium Falcon fired up her engines for a long day of towing oil barges and refueling a variety of large vessels, like container ships.

The first thing to know about barges is that they don’t move themselves. They are propelled and guided by tugs like the Falcon, which is owned by Centerline Logistics, one of the largest U.S. transporters of marine petroleum. Such companies may not be household names, but the nation’s energy supply chain would have broken under the pandemic’s pressure without the steady presence of their fleets — and their crews.

“We’re a floating gas station,” said Bowman Harvey, a director of operations at Centerline, as he stood aboard the Falcon, his neck tattoo of the Statue of Liberty pivoting from the base of his flannel whenever he gestured at a machine or busy colleague nearby. Demand is solid, he said, and the enterprise is profitable. The company’s client list, which includes Exxon Mobil and Maersk, the global shipping giant, is robust. But manning the fleet has become a struggle.

Multiyear charter contracts for key lines of business — refueling ships, transporting fuel for refineries and general towing jobs — are locked in across all three coasts, plus Hawaii, Alaska and Puerto Rico, Mr. Harvey said. Yet as pandemic-related staffing shortages have eased in other industries, Centerline is still short on staff. “Hands down,” Mr. Harvey said, “our biggest challenge right now is finding crew.”

Safely moving, loading and unloading oil at sea requires both simple and high-skill jobs that cannot be automated. And the labor supply issues in merchant marine transportation are emblematic of the conundrum seen in a variety of decently paying, male-heavy jobs in the trades.

Over the past 50 years, male labor force participation, the share of men working or actively looking for work, has steadily fallen as female participation has climbed.

Some scholars have a grim explanation for the trend. Nicholas Eberstadt, the conservative-leaning author of “Men Without Work,” argues that there has been a swell in men who are “inert, written off or discounted by society and, perhaps, all too often, even by themselves.” Others, like the Brookings Institution senior fellow Richard V. Reeves, put less emphasis on potential social pathologies but say a “male malaise” is hampering households and the economy.

Centerline employees are among about 75,000 categorized by the Department of Labor as water transportation workers, a group in which men outnumber women five to one.

Though the gender split in the industry is more even for onshore office roles, workers and applicants for jobs on the water are predominantly male. Centerline says it has roughly 220 offshore crew members and about 35 openings. Captains and company managers agree that changing attitudes toward work among young men play a part in the labor shortage. But the strongest consensus opinion is that structural demographic shifts are against them. “We’re seeing a gray wave of retirement,” said Mr. Harvey, who is 38.

Even though replacements are needed and, on the whole, lacking, there are new young recruits who are thriving, such as Noah Herrera Johnson, 19, who has joined Centerline as a cadet deckhand, an entry-level role.

On a Thursday morning out in the harbor, Mr. Herrera Johnson deftly unknotted, flipped and refastened a series of sailing knots as the crew unmoored from a sister boat that was aiding the refueling of a Norwegian Cruise Line ship. A small crowd of curious cruise passengers peeked down as he bopped through the sequences and the sun’s glare began to pierce the fog, bouncing off the undulating waves.

“I enjoy it a lot,” Mr. Herrera Johnson said of his work, as he sliced some meat in the galley later on. (Some kitchen work and cleaning are part of the gig and the fraternal ritual of paying dues.) “I get along with everyone — everyone has stories to tell,” he said. “And I was never good at school.”

Mr. Herrera Johnson, who is Mexican American and whose mother is from Seattle, spent most of his life in Cabo San Lucas, in Baja California, until he moved back to the United States shortly after turning 18.

Though entry-level roles aboard don’t require college credentials, new regulations have made at least briefly attending a vocational maritime academy a necessity for those who want to rise quickly up the crew ladder. Because he is interested in becoming a captain by his late 20s, he began a two-year program at the nearby Pacific Maritime Institute in March, and he earns course credits for work at Centerline between classes.

He got his “first tug” in May: an escapade from New Orleans through the Panama Canal to San Francisco, patched with some bad weather. “Two months, two long months — it was fun,” he said. “We had a few things going on. We lost steering a few times. But it was cool.”

In short, the industry needs far more Noahs. Many Centerline employees have informally become part-time recruiters — handing out cards, encouraging seemingly capable young men who may be between jobs, undecided about college or disillusioned with the standard 9-to-5 existence to consider being a mariner instead.

“When I’m trying to get friends or family members to come into the business,” Mr. Harvey said, “I make sure to remind them: Don’t think of this as a job, think of it as a lifestyle.”

Internet connections aboard are common these days, and there is plenty of downtime for movies, TV, reading, cooking and joking around with sea mates. (On slow days, captains will sometimes do doughnuts in the water like victorious racecar drivers, turning the whole vessel into a Tilt-a-Whirl ride for the crew: sea legs required.)

Of course, those leisurely moments punctuate days and nights of heaving lines, tying knots, making repairs, executing multiple refueling jobs and helping to navigate the tugboat: rain or shine, heat or heavy seas.

It’s “an adventurous life,” Mr. Harvey said, one that he and others acknowledge has its pros and cons. Mariners in this sector — whether they are entry-level deckhands, midtier mates and engineers, or crew-leading tankermen and captains — are usually on duty at sea in tight quarters and bunk beds for a month or more.

On the bright side, however, because of an “equal time” policy, full-time crew members are given roughly just as much time off for the same annual pay.

“When I go home, you know, I’m taking essentially 35 days off,” said Capt. Ryan Buckhalter, 48, who’s been a mariner for 20 years. For many, it’s a refreshing work-life balance, he said: None of the nettlesome emails or nagging office politics in between shifts often faced by the average modern office worker trying to get ahead.

Still, Captain Buckhalter, who has a wife and a young daughter, echoed other crew members when he admitted that the setup could also be “tough at times” for families, including his own.

Crew members say they value knowing that their work, unlike more abstract service jobs, is essential to world trade. And average starting salaries for deckhand jobs are $55,000 a year (or about $26 an hour) and as high as $75,000 in places like the San Francisco area, with higher living costs.

The company also offers low-cost health, vision and dental care for employees, and a 401(k) plan with a company match. So the chief executive, Matt Godden, said in an interview that he didn’t feel that wages or benefits were a central reason that his company and competitors with similar offerings had struggled to hire.

“Right now a lot of companies are really hurting,” Captain Buckhalter said. “You kind of got a little gap here with the younger generation not really showing up.”

If the labor market, like any other, operates by supply and demand, managers within the maritime industry say the supply side of the nation’s education and training system is also at fault: It has given priority to the digital over the physical economy, putting what are often called “the jobs of the future” over those society still needs.

Mr. Harvey adds that his industry is also grappling with increased Coast Guard licensing requirements for skilled roles, like boat engineers or tankermen, who lead the loading and discharging of oil barges. The regulations help ensure physical and environmental safety standards, Mr. Harvey said, but reduce the already limited pool of adequately credentialed candidates.

Women remain a rare sight aboard. Some captains make the case that this stems from hesitance toward a life of bunking and sharing a bathroom with a crop of guys at sea — a self-reinforcing dynamic that company officials say they are working to alleviate.

“We actually do have women that work on the vessels!” said Kimberly Cartagena, the senior manager for marketing and public relations at Centerline. “Definitely not as much as men, but we do have a handful.”

Several economists and industry analysts suggested in interviews that another way for companies like Centerline to add crew members would be to expand their digital presence and do social media outreach. Mr. Godden, Centerline’s chief executive, said he remained wary.

“If you did something very simple, like you set up a TikTok account, and you sent somebody out every day to create varied little snippets, and you get viral videos of strong men pulling lines and big waves and big pieces of machinery,” Mr. Godden said, then a company would risk introducing an inefficient churn of young recruits who would “like the idea of being on a boat” but not be a fan of the unsexy “calluses” that come with the job.

But in the long term, he said, there is reason for optimism. He pointed to the recent establishment of the Maritime High School, which opened a year ago just south of the Seattle-Tacoma airport with its first ninth-grade class.

“I think their first class is looking to graduate a hundred people, and then they got goals of getting up to 300, 400 graduates a year,” Mr. Godden said. He has been meeting with the school’s leaders this fall and is convinced they will help create the next pipeline in the profession.

“Yes, labor shortages may increase or decrease depending upon how the market works — but I always have this sense that there’s always going to be this sort of built-in group of folks who cannot — just cannot — stand seeing themselves sitting at a desk for 30, 40, 50 years,” he said. “It’s this hands-on business almost like, you know, when you’re a kid and you’re playing with trucks or toys, and then you get to do it in the life-size version.”

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