Federal authorities have raided an alleged Ponzi investment scam that promised to pay dividends to investors by claiming to hold amber mines whose profits would be paid out in the cryptocurrency – Gemcoin.
The Securities and Exchange Commission (SEC) announced the filing of fraud charges and the raid of a Southern California company – USFIA, allegedly running a Ponzi scheme that raised more than $32 million from investors both within and outside the U.S. since April 2013. The accused include founder Steve Chen and a total of 13 California-based companies at the center of the Ponzi scheme.
Essentially, Chen falsely promoted Arcadia-based USFIA as a marketing company owing large amber mines in the Dominican Republic and Argentina and other assets worth $50 billion, to investors. Buy-ins were set at amounts ranging from $1000 up to $30,000.
The full press release from the SEC is available here.
Numerous videos, websites and presentations promoting Gemcoin represented the cryptocurrency as one to better Bitcoin.
Chen also told investors that the U.S. government had purchased 70% of Gemcoins in circulation, and a 6,400% profit was guaranteed, according to promotional material.
Thousands of people are said to have invested in the company by changing their cash into “Gemcoin”,