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The trial of a Southern California-based financial scam is now set to go to the penalty phase next Tuesday to determine how much the company and the scheme's architect, Steve Chen, should pay the Securities and Exchange Commission.
Last month, a federal judge ruled that Chen's Gemcoin operation was fraudulent. "The violation took place over years and involved elaborate schemes," US District Court Judge R. Gary Klausner wrote in a summary judgment against Chen. "Defendant has shown no sign of recognition of wrongdoing and has offered no assurances against future violations." The SEC argued in court filings on December 21, 2016 that the remaining issues should be determined by the judge and not a jury and that said judge should find "in favor of sizeable penalties."
Amazingly, the amber mines did actually exist, according to a report filed late last year by the court-appointed receiver.
Some background on the Gemcoin scam and ensuing lawsuit.
How could an average person have known this was a scam? And how is this Gemcoin different, i.e. less reliable, than a more established crypto-currency like Bitcoin? Money is only money because people accept it. What makes Gemcoin a scam rather than a failed attempt at competing with Bitcoin?
-- submitted from IRC
(Score: 1) by charon on Thursday January 05 2017, @07:57PM
Well, the pyramid structure part would be a decent tip off of a scam. But then, plenty of people ignore that when it comes to Amway or Bernie Madoff.
I guess I fundamentally don't get the unbacked currency idea. Having a million bitcoins means nothing unless you can find another person willing to take them in exchange for something you want. Bitcoin happens to be over that hurdle, but other currencies which have not cleared it yet are possibly scams? Is it fake up until it reaches a critical mass of users/accepters and then it's real?
(Score: 3, Interesting) by jelizondo on Friday January 06 2017, @12:33AM
In effect, all currency is worth whatever people believe it is. Dollars, Euros, Pounds, whatever are backed by nothing but the promise of some government that they would take them as payment.
Quoting from the Treasury [treasury.gov] of the U.S.
Ain’t that cute? Any person or organization can demand another form of payment. So tell me, how much is that seashells?
(Score: 0) by Anonymous Coward on Friday January 06 2017, @04:51AM
They could, but unless some other form of payment was specified at the time the deal was struck, they wouldn't be able to sue for non-payment.
(Score: 3, Interesting) by dry on Friday January 06 2017, @04:58AM
The same can be said about gold, gems and such. While they do have some intrinsic worth, it's nowhere close to what people think.
I once heard an economist semi-seriously argue that the chicken would be an ideal currency. Takes enough maintenance that you won't hoard too much, generates interest in the form of eggs, which if nurtured turn into more chickens and if nothing else, it is always worth a chicken dinner. (The eggs also have intrinsic worth as food as well).