- Steve Chen, the founder, and CEO of GemCoin has been sentenced to ten years imprisonment for his involvement in the crypto Ponzi scheme.
- About 70,000 investors were defrauded of $147 million by the crypto Ponzi scheme, GemCoin.
- Between 2013 and 2015, Chen masterminded the Ponzi scheme which defrauded approximately 70,00 users of GemCoin of $147 million.
The founder and CEO of GemCoin, a crypto Ponzi scheme that defrauded about 70,000 users of $149 million has been sentenced to 10 years imprisonment.
Steve Chen to Spend Ten Years Behind Bars
Following a ruling on Monday, January 11, 2021, the 63-year-old California resident will face a minimum of ten years in prison.
In addition to his time in prison, Judge John F. Walter additionally ordered Chen to pay the IRS $1,885,094 in back taxes.
Who is Steve Chen?
Steve Chen was the owner and CEO of US Fine Investment Arts, Inc. (USFIA), GemCoin, and six other companies that used the same address.
Between 2013 and 2015, Chen fraudulently promoted investments in USFIA through one of his projects, GemCoin.
Earlier Court Appearances
In June 2020, Steve Chen pleaded to the fraud charges leveled against him. He pleaded guilty to crimes involving tax evasion and conspiracy to commit wire fraud.
As part of his plea agreement, he admitted to manipulating the U.S. Fine Investment Arts (USFIA), a company which he owned to promote GemCoin. He did this knowing his GemCoin currency was based on nonexistent gemstones.
On the Flipside
- In related news, a South Florida federal district judge has sentenced Jose Angel Aman, to six years in federal prison for operating a $25 million diamond investment scheme.
- The accused must also pay over $23 million in victim restitution.
- The Spanish Police, Policia Nacional, on Monday announced the detention of four people in the last week connected to a crypto Ponzi scheme.
- The authorities announced that around 380 BTC ($15 million) were scammed by the alleged fraudsters.
What is GemCoin?
GemCoin was multilevel marketing (MLM) scheme that went on for about 2 years; between 2013 and 2015. When the project started, Chen, who was the founder solicited investors and raised as much as $32 million.
Steve Chen has claimed that the value of Gemcoins was backed by mines around the world, including amber mines in the Dominican Republic and Argentina.
He claimed that the parent company of these mines, Alliance Financial Group claimed to have more than $50 billion in assets worldwide.
In its move to go public, investors were made to purchase “units of ownership” in USFIA, the parent company of Gemcoins. He promised that their stakes could be converted to common stock on a 1:1 basis and would debut for at least $20 per share.
Investors were duped into buying USFIA investments in amounts ranging between $1,000 and $30,000 each.
However, GemCoin never went global, sparking the first wave of suspicion. It was not until Sept. 22, 2015, before the Securities and Exchange Commission filed a lawsuit against Steve Chen, GemCoin, and a dozen other companies he owned.