An Arcadia City-based company, USFIA promoting a new cryptocurrency Gemcoin is being investigated by the U.S. authorities in connection with the alleged fraud, the Los Angeles Times reports

The Gemcoin, as described by Andy Beal, corporate advisor for USFIA, resembles a classical Ponzi scheme. The company sells packages of actual gems and then awards digital currency gemcoins based on how much is purchased. Customers then can sell the purchased gems and recruit more people to become sellers. The rewards will be converted to digital currency gemcoins at the end of the year. Gemcoins can only be redeemed for USFIA's products and services. 

However, the international promotional campaign recruited many investors to participate in the Gemcoin's project. At the moment a group of about of 50 of them claim that they lost money in the scheme. At least one investor has been interviewed by federal agents, and others have received letters from the bureau alerting them that they may have become victims of a securities fraud, according to the LA Times.

The Gemcoin currency has been presented as an investment similar to the bitcoin digital currency. Arcadia City Councilman, John Wuo called it a “breakthrough in finance” that “has great potential for our economy”. The Gemcoin website cites the enthusiasm around bitcoin to prove the potential of digital currencies. However, Gemcoin argues that bitcoin “begins to be banned by major financial and government institutions due to its instability”. It is claimed that bitcoin has “no foundation at all” being “simply the result of a mathematical and cryptographic algorithm”. On the contrary, Gemcoin is allegedly backed by some real-world value:

“The GEMCOIN created by USFIA, is now positioned as the best alternative to Bitcoin because today it is the only digital currency with AFG’s support, based on a real measurable value: the equivalent in rare gemstones (Amber).”

Therefore, Gemcoin will experience more explosive growth than bitcoin, the announcement concludes.


Aliona Chapel