Crypto Fund Founder Pleads Guilty to $100m Fraud Scheme

Crypto News

Crypto Fund Founder Pleads Guilty to $100m Fraud Scheme


The founder of two cryptocurrency hedge funds has pleaded guilty to securities fraud after apparently defrauding investors out of almost $100m.

Australian national Stefan He Qin, 24, launched Virgil Sigma and VQR in New York in 2017 and February 2020 respectively. The former purported to earn money from an algorithm which took advantage of market price differences between digital currencies, while the latter employed a number of trading strategies.

Together, the funds are said to have accrued over $114m under management from dozens of investors.

However, Qin had been stealing from Virgil Sigma since 2017, using it as a personal “slush fund” for investments in other cryptocurrency assets and property, including rental of a New York penthouse apartment, according to the Department of Justice (DoJ).

He’s said to have repeatedly lied to investors about their capital, including sending them false account statements, “tear sheets,” and K-1 tax forms.

Virgil Sigma continued to grow thanks to his misrepresentations and was even profiled in the Wall Street Journal in 2018, drawing a new influx of investors to the scheme.

However, by summer 2020 things were unravelling, with Qin forced to raid money invested in VQR to pay investors in Virgil Sigma who wanted to cash out. He also persuaded some of the latter to reinvest their ‘funds’ into VQR even though there was no money left to transfer.

In total, investors were apparently defrauded out of nearly $100m by Qin.

Sentencing is set for May 20 2021. One count of securities fraud carries a maximum term of 20 years behind bars.

Cryptocurrency fraud schemes like this are an increasingly popular way for fraudsters to get their hands on a lot of cash.

Just last week a man was charged with securities fraud after allegedly tricking investors out of $11m in an elaborate scheme which used actor Steven Seagal to promote a fake company.



Source link

Tags :
Share This :