Stefan He Qin, the founding father of two cryptocurrency hedge funds has been sentenced to greater than seven years in jail after U.S. authorities discovered that he cheated buyers out of $54 million,
A Sept. 15 statement from the U.S. Division of Justice (DoJ) introduced that U.S. District Choose Valerie Caproni handed Qin a 90 month sentence for defrauding his buyers out of $54 million.
The 24-year-old Australian owned and operated two cryptocurrency funding funds between 2017 and 2020 — Virgil Sigma and VQR, the latter of which was based in February 2020.
Regardless of Virgil Sigma claiming to take a position shoppers’ property in cryptocurrency arbitrage strategies, the DoJ discovered that Qin had embezzled investor capital from the fund to pay for private bills together with meals, lease, and personal investments since 2017.
To keep away from arousing suspicions amongst his buyers, Qin created false account statements and bogus tax paperwork claiming the agency had been worthwhile for each single month from August 2016 aside from March 2017.
After frequently mendacity to his shoppers relating to the “worth, location, and standing of their funding capital” — with Sigma claiming to $90 million in property regardless of Qin having “dissipated almost the entire investor capital” — Qin sought to steal property from VQR to pay redemption requests from Sigma’s buyers.
In December 2020, Qin ordered VQR’s head dealer to wind down the entire fund’s positions and switch the funds to the Australian. Regardless of warning that the transfer would incur losses for VQR’s buyers, the pinnacle dealer unwound VQR’s positions and forwarded the funds to Qin.
On Feb. 4, 2021, Qin pleaded guilty to 1 rely of securities fraud. Within the DoJ’s newest announcement, U.S. Legal professional Audrey Strauss mentioned:
“Qin’s brazen and wide-ranging scheme left his beleaguered buyers within the lurch for over $54 million, and he has now been handed the appropriately prolonged sentence of over seven years in federal jail.”
Qin has additionally been ordered to forfeit over $54 million and sentenced to a few years of supervised launch.
Associated: Ohio man pleads guilty to fraud over $30M crypto scam promising 15% monthly
Regulators worldwide have not too long ago highlighted the growing prevalence of crypto scams, with SEC head Gary Gensler highlighting how gaps in regulatory protections can endanger consumers in the beginning of the month.
“Traders could also be much less skeptical of funding alternatives that contain one thing new or ‘cutting-edge,’ or could get caught up within the worry of lacking out (FOMO),” Gensler warned.
In Might, the Federal Commerce Fee reported shopper losses of greater than $80 million on cryptocurrency funding scams since October 2020.
