Gemcoin Founder Agrees to Plead Guilty to Fraud, Tax Evasion for $147M Scheme

Steve Chen, the ringleader behind the $100 million-plus Gemcoin fraud of 2013-2015, agreed to plead guilty Wednesday to tax evasion and conspiracy to commit wire fraud.

The 62-year-old resident of Southern California will face a minimum of 10 years in prison, according to the Department of Justice (DOJ).

As part of his plea agreement, Chen admitted to running and promoting U.S. Fine Investment Arts (USFIA), an Arcadia, Calif., company that peddled investors its “Gemcoin” digital currency, backed by gemstones that did not actually exist.

The multi-level-marketing scheme attracted 70,000 victims worldwide in its two years of operation for a total haul of $147 million, according to the DOJ.

According to the DOJ, part of Chen's plea acknowledges he reported income of $138,000 in 2014, far less than the $4.8 million he actually took in that year.

“Mr. Chen lured victim investors around the globe by creating a mirage made of fashionable cryptocurrency features and dynamic marketing tactics,” said Paul Delacourt, the assistant director of the Federal Bureau of Investigation's Los Angeles Field Office, in the DOJ statement.

USFIA also triggered a whirlwind of chaos in local California politics. An Arcadia councilor loosely associated with the project resigned under pressure less than a week after the U.S. Securities and Exchange Commission raided USFIA’s headquarters in 2015.

The SEC’s subsequent case resulted in a $74 million judgment against USFIA in 2017.

Read the full plea agreement below: