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Gemcoin: Regulator orders digital currency firm to 'desist and refrain'

Amber stones that George Ma said he received after investing in GemCoin; but he said he lost $10,000.
Leslie Berestein Rojas/KPCC
Amber stones that investor George Ma said he received from GemCoin; but he said he lost $10,000.

California business regulators issued a desist and refrain order Thursday against an Arcadia business that allegedly bilked money from thousands of investors by marketing a virtual currency it touted as better than Bitcoin.

The alleged fraud scheme by U.S. Fine Investment Arts, Inc. involved a currency dubbed "Gemcoin" that was said to be backed by the value of the gemstone amber.

California Department of Business Oversight officials said they estimate hundreds of Californians and thousands nationwide have been victimized.

"All investment fraud is intolerable, but this Gemcoin scheme ranks high on the egregious scale," said DBO Commissioner Jan Lynn Owen in a statement. "The perpetrators' claims are outlandish and disturbing, and their unlawful conduct required quick action to help prevent further victimization."

The order named company president Steve Chen, vice president of investor relations Leonard Stacy Johnson and spokesman Weiwen (Wayne) Zhao.

Earlier this week, federal investigators seized computers and boxes of evidence from the company, according to the San Gabriel Valley Tribune.

According to DBO, USFIA claimed it owned amber mines around the globe with assets totaling $5 billion and that those "hard assets" backed the Gemcoins.

At a presentation in February, company representatives told potential investors that a $10,000 investment would earn them 66,000 Gemcoin at the price of 15 cents each. Investors were promised a guaranteed profit within 60 days, according to DBO. Instead, the setup resembled a pyramid scheme.

In September, one local Chinese immigrant, 71-year-old George Mo, told KPCC he was promised a return rate worth at least 64 times his investment. Instead, he received $70 worth of amber and lost his life savings, worth $10,000.

This story has been updated.