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Gemcoin's Creator Pleads Guilty

3 min reading

Steve Chen confessed to commiting a Gemcoin fraud. The man, with the use of the fake cryptocurrency that was allegedly backed by precious stones, raised around $147 million from over 70,000 investors from around the world.

Gemcoin - fake cryptocurrency

According to Bloomberg, Steve Chen, a 62-year-old Southern California's resident, as part of the settlement agreed to plead guilty to fraud and tax evasion.

Chen was the owner and the CEO of US Fine Investments Arts (USFIA), a company that promised investors profits from amber and precious stones mines. It later turned out that the mines did not exist, so it comes as no surprise that what Chen actually sold the investors were worthless digital coins that were allegedly supported by jewels. In fact, Gemcoin "cryptocurrency" was supported only by rhetoric and skilful marketing.

"Mr. Chen's promises made to investors, on the other hand, were just as worthless as his nonexistent mines and counterfeit digital currency."

- said Nick Hanna, US federal government's lawyer, in a statement.

USFIA has been operating since 2013. In 2015, its activity was cut short by the American Securities and Exchange Commission (SEC). As the United States Department of Justice (DOJ) states, the multi-level marketing program has attracted over 70,000 people worldwide in just two years, with a total investment of around $147 million.

Chen, among other things, has told investors that he was in the possession of mines in not only the United States, but also in Dominican Republic, Mexico and Argentina. Moreover, the investors paid $30,000 for packages containing amber and precious stones at artificially high prices. They were also paying for "points" that should be converted into shares of his company when it was to become public.

While recruiting new people, the investors were offered bonuses such as cash, luxury cars, houses in the Los Angeles area, and EB-5 visas for immigrant investors. According to US authorities, Chen used investors' money to finance his extravagant lifestyle and his love for gambling.

DOJ reports that Chen faces a minimum prison sentence of 10 years and a fine of at least $500,000. He was also obliged to pay full restitution to all of the investors who fell his victims. The man has also agreed to pay as much as $2 million back in outstanding taxes.

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