The US Securities and Exchange Commission (SEC) filed fraud charges against the operator of an alleged digital currency Ponzi scheme. The US regulator also froze the assets of individuals connected with this purported scam.
According to the SEC press release, California resident Steve Chen and 13 California-based entities, including the US Fine Investment Arts, Inc (USFIA), are at the center of the alleged scheme. The complaint filed in the federal court in Los Angeles indicated that USFIA and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since April 2013.
Digital Currency Ponzi Scheme Operations
Investigations are still ongoing but if proven guilty, USFIA and its subsidiary Gemcoin would be part of the most lucrative digital currency Ponzi scheme to date. The SEC complaint indicated that 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.
Investors were then lured into investing amounts ranging from $1,000 to $30,000 while potentially earning higher returns if they are able to recruit more clients in the program. The company then converted these investments into “Gemcoin” which is a digital currency supposedly backed by amber holdings. The