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FeedSource: [ArsTechnica]

Time: 2017-01-03 18:38:02 UTC

Original URL: http://arstechnica.com/tech-policy/2017/01/gemcoin-cryptocurrency-that-never-existed-was-a-scam-all-along/ [arstechnica.com] using UTF-8 encoding.

Title: Gemcoin, cryptocurrency that never existed, was a scam all along

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Gemcoin, cryptocurrency that never existed, was a scam all along

Arthur T Knackerbracket has found the following story [arstechnica.com]:

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 [documentcloud.org] 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 [documentcloud.org]."

Amazingly, the amber mines did actually exist, according to a report filed late last year by the court-appointed receiver.

As the Pasadena Star-News [pasadenastarnews.com] reported at the time:

It appears the amber mines did exist, though their value was seemingly overstated and there’s no indication the amber inside backed the cryptocurrency at all, according to Seaman’s November report [documentcloud.org] to the courts.

Investigators found 300 acres of land in the Dominican Republic, with a working mine, purchased for $373,000, in the name of Steven Chen’s brother, Yan Chen, and a company run by Yan. The sale was never fully recorded and the land is still titled in the name of the sellers.

“It appears the land has mines on it, which are deep, man- and machine-made holes and tunnels, which are operating and amber is being extracted from the land,” Seaman wrote.

USFIA paid $13 million to Ammine SRL, Yan Chen’s company. Those funds paid for operating expenses and for the purchase of amber and other materials. Yan Chen’s company was paying $2 per gram for amber, according to Seaman. It’s unclear where the purchased amber is today.

The receiver found one peso in Ammine SRL’s bank account.

In addition to the SEC’s federal civil lawsuit, a group of local investors has also filed a similar suit in Los Angeles Superior Court, which remains pending.

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