Alchemy Coin CEO sentenced to 7 years for $7M COVID relief and ICO scams

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A man charged with defrauding the U.S. government with over $7 million in a well-orchestrated COVID relief scam has been sentenced to seven years in prison by a federal court. Justin Cheng is also charged with defrauding investors over $400,000 in an alleged ICO scam.

Cheng, a Taiwanese resident, entered the U.S. on a student visa to attend Pennsylvania State University. According to the U.S. Department of Justice (DoJ), from April to August 2020, he submitted online applications and ended up getting over $7 million from the SBA’s Paycheck Protection Program. The PPP is a program that disburses forgivable loans to small businesses for job retention during the COVID-19 economic havoc.

The DoJ said that Cheng purported to employ over 200 and to pay over $1.5 million in monthly wages, while in reality he employed 14 people. In his online applications for the loans, he included some random names, as well as the names of popular figures including a TV anchor and a former NFL player.

Once he received the money, Cheng didn’t use it for business expenses as required by the law, authorities said. Cheng reportedly transferred $1 million abroad, withdrew $360,000 in cash and spent an almost similar amount on personal expenses, including acquiring a $40,000 18-carat gold Rolex and a 2020 S560X4 Mercedes.

It didn’t stop here for the Taiwanese national. From 2017 to 2019, he lured investors who forked out $400,000 towards Alchemy Coin Technology Limited.

“These investments were obtained through materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the product readiness of its purported blockchain-based peer-to-peer lending platform, and the registration of its tokens as part of an initial coin offering,” the DoJ states.

The 25-year-old pleaded guilty to four charges in April this year. As CoinGeek reported, he admitted to one count each of major fraud against the U.S., securities fraud, wire fraud and bank fraud. The maximum sentence he stood was 80 years, but Judge Alison Nathan sentenced him to 72 months behind bars. In addition, he’ll serve three years of supervised release and forfeit the luxury items seized in connection with his arrest.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.