Steve Chen, the mastermind behind the $147 million Gemcoin cryptocurrency scheme, has admitted to wire fraud and tax evasion in a plea settlement.
Steve Chen, the mastermind behind the $147 million Gemcoin cryptocurrency scheme, has admitted to wire fraud and tax evasion in a plea settlement.
The 62-year-old Southern California resident agreed that he and different co-conspirators fraudulently promoted a cryptocurrency known as Gemcoin (or Gem Cash) that helped fleece $147 million from 70,000 victims.
Chen, also called “Boss,” reported an earnings of $138,000 in 2014 which is a far cry from the $4.eight million he now admits to pocketing that 12 months. Chen used the proceeds to purchase houses and pay for a playing behavior, authorities stated.
Digital Cash Backed By Nothing
Between July 2013 and September 2015, Chen ran a multi level marketing scheme to advertise U.S. Superb Funding Arts, Inc. (USFIA) which rewarded buyers first with factors, after which with Gemcoins.
These digital cash have been supposedly backed by gems mined by the corporate and may very well be traded on the USFIA platform.
Whereas the worth of the cash supposedly elevated primarily based on the corporate’s gemstone gross sales, in actuality, the USFIA didn’t personal or function any gemstone mines. As an alternative, USFIA purchased gems from business suppliers and assigned grossly inflated costs.
U.S. Legal professional Nick Hanna stated in a press release:
“Mr. Chen’s guarantees to buyers have been as nugatory as his non-existent mines and phony digital foreign money. This case ought to remind all buyers that trappings of success could convey legitimacy, however everybody ought to train excessive care when contemplating giving hard-earned cash to any outfit selling stylish merchandise and indulgent income.”
Chen Will Compensate Victims
Chen has agreed to pay again $1,885,094 in again taxes for 2014 in addition to pay a civil fraud penalty and curiosity.
He is going through a sentence of 10 years in jail, a high quality of at the least $500,000, and he’s required to pay “full restitution” to all of the victims.