Steve Chen, the Chief Executive Officer (CEO) and mastermind behind the $147 million Gemcoin cryptocurrency scheme, reportedly admitted to wire fraud and tax evasion in a plea agreement.
According to reports, Steve Chen admitted to running and promoting U.S. Fine Investment Arts (USFIA). An Arcadia, Calif., company that peddled investors its “Gemcoin” digital currency, backed by gemstones.
According to the Department of Justice (DOJ): “Mr. Chen lured victim investors around the globe by creating a mirage made of fashionable cryptocurrency features and dynamic marketing tactics.”
How things played out
While the value of the coins supposedly increased based on the company’s gemstone sales. In reality, the USFIA didn’t own or operate any gemstone mines. Instead, USFIA bought gemstones from commercial suppliers and assigned grossly inflated prices.
The multi-level-marketing scheme reportedly attracted about 70,000 investors worldwide within two years of operation. As well as, the sum of $147 million.
Besides, Chen, also known as “Boss,” reported an income of $138,000 in 2014. But, now he revealed it’s $4.8 million for that year. Chen reportedly used the proceeds to buy homes and pay for a gambling habit.
Steve Chen, a 62-year-old resident of Southern California stands to face a minimum of 10 years in prison, according to the Department of Justice (DOJ). Although, Chen already agreed to pay back $1,885,094 in taxes for 2014. As well as, to pay a civil fraud penalty and interest.
Notably, Nick Hanna, the U.S. Attorney commented on the situation. He said: “Mr. Chen’s promises to investors were as worthless as his non-existent mines and phony digital currency.”
Furthermore, he gave advice to investors concerning similar fraud cases.
“This case should remind all investors that trappings of success may convey legitimacy. But, everyone remains advised to exercise extreme care when considering giving hard-earned money to any outfit promoting trendy products and extravagant profits,” he said.