The founder of GemCoin, one of the earliest Ponzi schemes seen in the crypto world, has been sentenced to 10 years behind bars.
GemCoin targeted 72,000 investors between 2013 and 2015. Many of them were vulnerable, and were drawn in after being promised that they would receive unrealistically high returns.
Steve Chen, otherwise known as “The Boss,” is believed to have defrauded victims to the tune of $147 million. Last June, he pleaded guilty to one count of tax evasion — and another count of conspiracy to commit wire fraud.
The Department of Justice described GemCoin as a “massive investment scam” where victims were given the chance to invest in a “phony digital currency purportedly backed by billions of dollars’ worth of amber and other gemstones.”
Judge John F. Walter concluded that Chen, 63, has told a “litany of lies” in his quest to promote a scam of “epic proportions.”
In their sentencing remarks, prosecutors wrote:
“Because the primary focus was on recruiting other investors … the vast majority of investors were destined to lose money – while making [Chen] very wealthy.”
Chen also committed tax evasion by reporting that he had a gross income of $138,015 in 2015, when in fact his actual income was in excess of $4.8 million. This meant that he owed the IRS at least $1.8 million.
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