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GemCoin Scam Shutdown

Unregulated digital currencies are a perfect tool for scammers to take money from people. GemCoin is the latest example of this type of scam. The Securities and Exchange Commission today announced it has filed fraud charges and obtained asset freezes against the operator of a worldwide pyramid scheme that falsely promised investors would profit from a venture purportedly backed by the company’s massive amber holdings.

California Department of Business Oversight officials said they estimate hundreds of Californians and thousands nationwide have been victimized.

Here are the details of how the GemCoin scam took advantage of people:

Company representatives told potential investors that a $10,000 investment would earn them 66,000 Gemcoin at the price of 15 cents each. Investors were promised a guaranteed profit within 60 days. Instead, an investor received $70 worth of amber and lost his life savings, worth $10,000. – Source Scpr.org

California resident Steve Chen falsely promoted USFIA as a legitimate multi-level marketing company that owns several large and valuable amber mines in Argentina and the Dominican Republic.

stevechen

Investors were told that they could profit by investing in amounts ranging from $1,000 to $30,000, and earn larger returns based on the number of investors they brought into the program.

In September 2014, Chen and USFIA  claimed to have converted existing investors’ holdings into Gemcoins, which they said was a virtual currency secured by the company’s amber holdings. In reality, Gemcoins are worthless.

Here is a video of how this scam was presented to people:

According to the SEC’s complaint, USFIA and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since at least April 2013.

The Hon. R. Gary Klausner of the U.S. District Court for the Central District of California on Monday granted the SEC’s request for an asset freeze and the appointment of Thomas Seaman as the temporary receiver over USFIA and the other entities. In addition to the temporary relief, the SEC is seeking preliminary and permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties.

Conclusion

The receiver is going to be soon hunting down these GemCoin scammers money and returning what is left to the victims of this scam.

Here is the full complaint by the SEC: