Steve Chen, founder of $147 million Gemcoin cryptocurrency scheme, has accepted plea deal and admitted to wire fraud and tax evasion. Chen, also known as “Boss,” agreed that he promoted Gem Coins that helped fleece $147 million from 70,000 victims.
He also reported an income of $138,000 in 2014. The 62-year-old Southern California resident used the proceeds to buy homes and pay for a gambling habit, authorities said.
Chen ran a multi level marketing scheme to promote U.S. Fine Investment Arts, Inc. (USFIA) between July 2013 and September 2015. The company rewarded investors first with points, and then with Gemcoins. The crypto were supposedly supported by gems mined by the company and could be traded on the USFIA platform.
While the value of the coins supposedly increased based on the company’s gemstone sales, in reality, the USFIA did not own or operate any gemstone mines. Instead, USFIA bought gemstones from commercial suppliers and assigned grossly inflated prices.
Steve Chen will face a minimum of 10 years in prison, according to the Department of Justice (DOJ).