Gemcoin Founder Sentenced to Prison for $147 Million Crypto Ponzi Scheme


Gemcoin founder was sentenced on Monday to 10 years in federal prison for defrauding tens of thousands of investors in one of the largest early cryptocurrency Ponzi schemes.

January 12, 2020 | AtoZ Markets The US District Judge, John F. Walter has found guilty the founder of Gemcoin cryptocurrency Steve Chen for organizing a fraudulent scheme. This is stated in the message of the Ministry of Justice.

Gemcoin sentenced to 10 years imprisonment for defrauding over 70,000 investors

From 2013 to 2015, the 63-year-old California resident owned the U.S. Fine Investment Arts (USFIA) platform, allegedly associated with the extraction of amber and precious stones. The scheme attracted investors with bonuses for participation and later began to offer Gemcoin tokens.

According to the authorities, Chen received about $147 million from 72,000 victims. Also, the owner of the USFIA declared $138,000 in income in 2014 with a confirmed expenditure of $4.8 million.

Mr. Chen lured victim investors around the globe by creating a mirage made of fashionable cryptocurrency features and dynamic marketing tactics,” the FBI Assistant Director said earlier.

In February 2020, the founder of Gemcoin pleaded guilty to fraud and tax evasion. As a result, the judge sentenced him to 10 years in prison and ordered him to pay the IRS $1.8 million as back taxes.

See also: OneCoin Ponzi Scheme Lawyer Disbarred for Money Laundering, Conspiracy

Will the victims of the Ponzi scheme be compensated?

While Chen has been sentenced to prison, the California court has scheduled a restitution hearing in July to discuss compensation to the victims of the fraudulent scheme.

Apart from the criminal charges, he settled civil charges with the US Securities and Exchange Commission (SEC) in 2017 in a $71 million lawsuit against him. Chen then agreed to refund the ill-gotten funds to the victims and to liquidate his companies.

As a reminder, the US SEC froze the assets of Argyle Coin Ponzi scheme back in 2019. However, in December 2020, the founder of the cryptocurrency project received seven years in prison for organizing a Ponzi scheme worth $25 million.

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