Steve Chen, the mastermind behind the $147 million Gemcoin cryptocurrency scheme, has admitted to wire fraud and tax evasion in a plea agreement.

The 62-twelvemonth-old Southern California resident agreed that he and other co-conspirators fraudulently promoted a cryptocurrency called Gemcoin (or Jewel Coins) that helped fleece $147 million from 70,000 victims.

Chen, also known equally "Boss," reported an income of $138,000 in 2022 which is a far cry from the $four.viii million he now admits to pocketing that year. Chen used the gain to purchase homes and pay for a gambling habit, authorities said.

Virtual Coins Backed By Cypher

Between July 2022 and September 2022, Chen ran a multi level marketing scheme to promote U.S. Fine Investment Arts, Inc. (USFIA) which rewarded investors first with points, and then with Gemcoins.

These virtual coins were supposedly backed by gems mined past the visitor and could be traded on the USFIA platform.

While the value of the coins supposedly increased based on the company's gemstone sales, in reality, the USFIA did not own or operate whatsoever gemstone mines. Instead, USFIA bought gemstones from commercial suppliers and assigned grossly inflated prices.

U.S. Attorney Nick Hanna said in a statement:

"Mr. Chen's promises to investors were every bit worthless as his non-real mines and phony digital currency. This instance should remind all investors that trappings of success may convey legitimacy, but anybody should practise extreme care when considering giving hard-earned money to any outfit promoting trendy products and extravagant profits."

Chen Will Compensate Victims

Chen has agreed to pay back $one,885,094 in back taxes for 2022 likewise every bit pay a civil fraud penalty and interest.

He's facing a sentence of 10 years in prison, a fine of at least $500,000, and he'southward required to pay "full restitution" to all the victims.