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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 referred to as “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 yr. Chen used the proceeds to purchase properties and pay for a playing behavior, authorities stated.
Digital Cash Backed By Nothing
Between July 2013 and September 2015, Chen ran a multi degree advertising scheme to advertise U.S. Positive Funding Arts, Inc. (USFIA) which rewarded buyers first with factors, after which with Gemcoins.
These digital cash had been supposedly backed by gems mined by the corporate and could possibly 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 a substitute, USFIA purchased gems from industrial suppliers and assigned grossly inflated costs.
U.S. Lawyer Nick Hanna stated in a press release:
“Mr. Chen’s guarantees to buyers had been as nugatory as his non-existent mines and phony digital forex. This case ought to remind all buyers that trappings of success might convey legitimacy, however everybody ought to train excessive care when contemplating giving hard-earned cash to any outfit selling stylish merchandise and indulgent earnings.”
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 a minimum of $500,000, and he’s required to pay “full restitution” to all of the victims.
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