A California politician has become embroiled in a growing controversy surrounding an investment company, an alternative digital currency and investors who say they’ve been duped.
According to reports by The Pasadena Star-News, state and federal regulators are investigating US Fine Investment Arts Inc (USFIA), a company backing a digital currency called Gemcoin. The Los Angeles Times reports that the US Federal Bureau of Investigation (FBI) is also speaking with investors who have accused the company of running a scam.
An official with the California Department of Business Oversight confirmed that an investigation was underway, the Star-News reported, but declined to comment further.
As a result of the growing controversy, Arcadia City Councilman John Wuo – who earlier this year made appearances at local events hosted by the company behind Gemcoin – has faced calls to resign. According to the LA Times, Wuo once called Gemcoin a “breakthrough in finance” and something that “has great potential for our economy”.
A website associated with the digital currency, states that Gemcoin is “guaranteed by $15bn” and “perfectly legal”.
Gemcoins are said to be earned when customers purchase a precious stone called amber. USFIA uses Gemcoins as a kind of reward token. According to the website, a purchase of $1,000 worth of amber gemstones would net 7.6 Gemcoins. A purchase of $30,000 worth of amber gemstones would result in a reward of more than 230 Gemcoins.
Wuo is now denying any wrongdoing, stating that his appearances were part of his duties as a local politician who supports local businesses.
“I haven’t done anything. I don’t have any association with [Gemcoin],” Wuo told the Times.
Further, the councilman has said that his likeness was unlawfully used by the company to promote Gemcoin. The Gemcoin website cites Wuo’s support at its events, including a launch party in September 2014.
Andrew Beal, corporate counsel for the company, told the LA Times that critics are wrong about Gemcoin and the company behind it. He said that the currency currently exists as a rewards program and will be converted into cryptocurrency tokens later this year.
Image via Shutterstock
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.