Steve Chen, the founder of US Fine Investment Arts Inc (USFIA), a sham company that peddled the fraudulent GemCoin crypto scam, has pleaded guilty to tax evasion and conspiracy to commit wire fraud. The ruling, which comes after Chen agreed a plea deal with investigators, brings to an end a case that began in 2015 and has already seen $74 million in fines paid out.
70,000 Victims Lost $147 million
Chen began operating USFIA in 2013, selling investors on the concept of GemCoin – a supposed cryptocurrency backed by gemstones such as amber. In reality however it was simply a Ponzi scheme, one that attracted 70,000 victims worldwide for a total haul of $147 million.
USIFA and GemCoin came to a sticky end in 2015 after the USFIA offices were raided by the Securities and Exchange Commission (SEC). Two years later, Chen and some associates were fined a total of $74 million on the back of the SEC’s investigation into the crypto scam, but the opening of Chen’s accounts held gems of a different kind for the authorities – they found that Chen filed earnings of less than ten percent of the actual sum he earned during the period, which totaled more than $4 million.
This led prosecutors to add tax evasion to the outstanding wire fraud charge, both of which Chen has now pled guilty to. He faces a maximum of ten years in prison, a $500,000 fine, and restitution to his victims, which currently stands at around $112 million.
The Early Days of Crypto Scams
The fact that Chen managed to con $147 million out of investors in the early days of cryptocurrency before it enjoyed its 2017 surge in popularity is testament to his scamming skills – along with the crypto scam OneCoin, it was clearly one of the most successful of the early days of crypto.
