SEC says Gemcoin is nothing more than "a fraudulent pyramid scheme."

Susoni

The Securities and Exchange Commission announced Thursday that it sued a Southern California company over an alleged Ponzi scheme resulting in a loss to investors of at least $32 million. If the government’s accusations are correct, that would make Gemcoin one of the largest digital currency-based financial schemes ever.

Thousands of people in the United States and abroad are believed to have put money into the company, converting their cash into "Gemcoin," a Bitcoin-like cryptocurrency.

Numerous online promotional videos in many languages claim that Gemcoin’s parent company, Alliance Finance Group (AFG) and its subsidiary United States Fine Investment Arts (USFIA), controlled $50 billion in amber mine assets in Latin America.

Judge labels Bitcoin Savings and Trust a "sham and a Ponzi scheme."

The Securities and Exchange Commission announced Thursday that it sued a Southern California company over an alleged Ponzi scheme resulting in a loss to investors of at least $32 million. If the government’s accusations are correct, that would make Gemcoin one of the largest digital currency-based financial schemes ever.

Thousands of people in the United States and abroad are believed to have put money into the company, converting their cash into "Gemcoin," a Bitcoin-like cryptocurrency.

Numerous online promotional videos in many languages claim that Gemcoin’s parent company, Alliance Finance Group (AFG) and its subsidiary United States Fine Investment Arts (USFIA), controlled $50 billion in amber mine assets in Latin America.

"We allege that the defendants’ false claims of riches that investors would realize from USFIA’s amber mining activity never materialized," Michele Wein Layne, director of the Securities and Exchange Commission’s Los Angeles office, said in a Thursday statement. "In reality, as alleged in the complaint, the defendants were operating a fraudulent pyramid scheme that left many investors with nothing."

The unveiling of the federal civil lawsuit comes days after the United States Marshals Service and the Arcadia Police Department froze assets and raided corporate offices at 135 East Live Oak Avenue in Arcadia, north of downtown Los Angeles. The companies now operate under a court-appointed receiver, Thomas Seaman, who did not return Ars' request for comment.

That building is the corporate address for AFG, USFIA, and a number of other companies owned by a man named Steve Chen, who authorities believe is the head of this entire operation.

Neither Chen, nor USFIA’s attorney Andy Beal, responded to Ars’ repeated requests for comment.

Zero, zilch, nada

According to the civil complaint accusing Chen of securities fraud he had initially offered investors "shares" in the company in April 2013: