The Founder of Gemcoin, Steve Chen, has pleaded guilty to wire fraud and tax evasion charges, and faces a minimum sentence of 10 years in prison.

Gemcoin operated from 2013 to 2015 and defrauded 70,000 people for a total of $147 million. Gemcoin claimed to be a cryptocurrency backed by gemstones, although no gemstones existed. Further, it appears no Gemcoin cryptocurrency was ever launched.

In order to entice investors, Gemcoin claimed to be backed by several prominent gem mines including the Amber mines in the Dominican Republic. Supposedly, the value of Gemcoin would vary based on how much money the Gemcoin company made selling gems.

Ultimately, Chen actually spent the money on luxury homes, sports cars, and lots of gambling, while simultaneously completely evading taxes, which is one of the primary things that got him caught.

Aside from the prison time, Chen will have to pay a $500,000 fine on top of $1.8 million of taxes and any additional interest.

Overall, the Gemcoin saga is a reminder of how crypto investors need to be very careful when investing in crypto projects.