For passive investors just knowledgable enough about Bitcoin to be pissed off that they missed out buying them when they were just pennies a coin, the fear of letting another speculative cryptocurrency pass them by is strong indeed. So strong you can even sell them on currency that doesn’t even exist.
Which leads us to a $100 million class action suit filed by the victims of an alleged Ponzi scheme revolving around the fake cryptocurrency “Gemcoin.” Coindesk reports the complaint, filed Monday in L.A. Superior Court by the Liu Law Group, names 10 defendants who ran the scheme. Among them is John Wuo, a former mayor of Arcadia City and city councilman until he resigned in the wake of the lawsuit.
“In one particular video clip of Wuo [at a marketing event], the first thing he said to the crowd was ‘I am the mayor of Arcadia,’ so obviously that’s important,” Attorney Long Z. Liu told The Los Angeles Daily News. “Especially to investors in China because if a business is publicly endorsed by a government official, not only is the business legitimate, but the business will make a lot of money.”
According to the complaint:
“Defendants themselves, and through their entities and agents, sold worthless assets called Gemcoins, which were purportedly backed by their own amber mines in the Dominican Republic. Defendants heralded Gemcoin as a new cryptocurrency they invited that would be revolutionary and grow exponentially in value, and that Plaintiffs could become early investors.”
At the center of the suit is U.S. Fine Investment Arts, the defendant’s company that promised investors Gemcoin was already supported by the Chinese government and President Obama. Defendants were accused of running similar scams in China and Thailand. The claims against them in California include fraud, negligence, breach of contract and civil R.I.C.O, the Racketeer Influenced and Corrupt Organizations Act.
The Los Angeles Daily News reports Wuo, who is under investigation by the Fair Political Practices Commission, claims his resignation from politics is related to health and personal reasons.
Consider this a sober reminder not to trust any cryptocurrency, no matter how good the sales pitch, unless you know for a fact someone’s traded it for MDMA on the dark web.