Former CEO Of Alchemy Coin Sentenced To Prison For ICO Fraud, COVID-19 Relief Scams

Justin Cheng, the former chief executive officer of blockchain lending startup Alchemy Coin, has been sentenced to six years in prison.

According to a release from the Department of Justice on Wednesday, Cheng was charged with a number of offenses relating to defrauding investors.

The former CEO allegedly committed securities fraud by obtaining approximately $400,000 of investments in 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,” according to the DOG.

Additionally, Cheng acquired $3.7 million by applying for Paycheck Protection Program (PPP) loans from a pandemic-focused relief program funded by the U.S. government using doctored tax records from fake employees.

The list of employee names reportedly included a co-anchor on Good Morning America, a former National Football League player and a prominent former Penn State football coach who is now deceased.

Cheng, who entered the U.S. on a student visa to attend Pennsylvania State University, deposited $2.8 million into his personal account. He then transferred $1 million abroad and used the remaining to acquire luxury items such as an 18-carat gold Rolex watch and a Mercedes.

The 25-year-old pleaded guilty to several counts of fraud in April. In addition to his 72-month prison sentence, Cheng has been ordered to surrender the luxury items seized in connection with his arrest.

Photo: Sigmund on Unsplash.