Man behind GemCoin, a fake cryptocurrency, settles lawsuit for $71M
Steve Chen is a Southern California entrepreneur who was accused by the Securities and Exchange Commission of creating a massive scheme involving GemCoin, a purported cryptocurrency that was “backed” by amber mines. He has just settled his lawsuit brought by the government. Chen’s civil trial had been set for Tuesday.
In the eight-page final judgment, which was issued on Monday, Chen agreed to no longer participate in any similar financial dealings. In addition, he and his former companies will have to pay back over $51.2 million in ill-gotten gains, plus $3.79 million in interest, and a $16.7 million penalty as a result. Some of that money will be repaid by liquidating his companies’ assets, including multiple pieces of real estate. A recent report by the court-appointed receiver found records showing that approximately 65,000 unique e-mail addresses of investors had been affected. But even more people may have been put at risk.
Neither SEC attorneys nor lawyers representing Chen immediately responded to Ars’ request for comment.
As Ars reported two months ago, US District Judge Robert G. Klausner ruled that Chen’s Gemcoin operation was fraudulent.
“The violation took place over years and involved elaborate schemes,” Judge Klausner wrote in a summary judgment against Chen. “Defendant has shown no sign of recognition of wrongdoing and has offered no assurances against future violations.” The SEC argued in court filings on December 21, 2016 that the remaining issues should be determined by the judge and not a jury. The SEC argues that said judge should find “in favor of sizeable penalties.”
Gemcoin advertised itself in ridiculous promotional videos (see above) as a purported cryptocurrency that was “trusted,” as it was “backed” by amber mines. The offices of Gemcoin’s parent company, Alliance Finance Group, and its subsidiary, United States Fine Investment Arts, were raided in October 2015 by federal and local authorities.
Steve Chen and the companies associated with Gemcoin also face a proposed class-action lawsuit on behalf of alleged victims filed in state court in Los Angeles. The lawyer who brought the state case, Long Liu, did not immediately respond to Ars’ request for comment.
Source: ars TECHNIKA
