A fund manager was sentenced to 7 years in prison for running a $54 million Ponzi scheme.
Aussie crypto fund manager gets 7 years for stealing $54M. Stefan He Qin, founder of two bitcoin hedge funds, was sentenced to over seven years in prison for defrauding investors of $54 million.
The DoJ said on Sept. 15 that U.S. District Judge Valerie Caproni sentenced Qin to 90 months in prison for scamming his investors of $54 million.
Between 2017 and 2020, the 24-year-old Australian owned and controlled two cryptocurrency investment funds, Virgil Sigma and VQR (established in February 2020).
Qin used investor funds to pay for personal costs like food, rent, and private investments since 2017, despite Virgil Sigma’s claims to invest client funds in bitcoin arbitrage methods.
To prevent investor suspicion, Qin fabricated fake account statements and tax paperwork saying the firm had been profitable every month from August 2016 to March 2017 except March 2017.
Qin intended to steal assets from VQR to satisfy redemption demands from Sigma’s investors after lying to them about the “value, location, and status of their investment capital” (despite Sigma claiming $90 million in assets).
Qin directed VQR’s lead trader to close all positions and move cash to Australia in December 2020. Despite warnings from VQR’s investors, the head trader unwound positions and delivered monies to Qin.
The securities fraud charge was dropped on Feb. 4, 2021. U.S. Attorney Audrey Strauss remarked in a recent announcement:
Qin’s brazen and wide-ranging scheme left his beleaguered investors in the lurch for over $54 million, and he has now been handed the appropriately lengthy sentence of over seven years in federal prison.
Qin was also fined $54 million and sentenced to three years of probation.
Regulators around the world have increasingly emphasised the rise of crypto frauds, with SEC Chairman Gary Gensler stressing how regulatory gaps might put consumers at risk.
“Investors may be less sceptical of new or ‘cutting-edge’ investment opportunities, or may get caught up in FOMO,” Gensler said.
Since October 2020, the FTC documented over $80 million in consumer losses due to cryptocurrency investment schemes.