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A former cryptocurrency executive, who raised more than $ 90 million for an investment fund, was sentenced to more than 7 years in prison on Wednesday for leading what prosecutors have described as a Ponzi scheme.
Stefan Qin, 24, ran Virgil Sigma Fund LP for three years until 2020. He pleaded guilty in February and was sentenced on Wednesday.
“I abused their trust in an immoral and illegal manner to increase my success,” Qin said, referring to his scammed investors.
The Justice Department said in a February statement:
Stefan He Qin drained nearly all of the assets from the $ 90 million cryptocurrency fund he owned, stealing money from investors, spending it on indulgences and speculative personal investments, and lying to investors about them. fund performance and what it had done with their money. “
In March 2020, a well-positioned investor in the market shared a briefing Virgil was sending to investors as part of an effort to raise more funds. The Southern New York District Attorney’s Office claimed that the former hedge fund had scammed more than 100 investors, as reported by The Wall Street Journal.
“We sniffed it out pretty quickly because the numbers didn’t make sense,” the investor said. “The performance figures relative to the market just seemed out of sync. Although the arbitrage strategies at the time were lucrative, the numbers he was talking about didn’t make sense. “
The pitch said the company “pursues traditionally risky indicator opportunities for cryptocurrencies, such as extreme volatilities, high entry barriers and the birth of cross-border trade by taking advantage of arbitrage opportunities at worldwide”.
He shared his feedback, which he claimed to have been audited:
The company claimed to return to over 100% in 2018, a year in which crypto prices plunged, what many are calling the crypto winter. He said he brought in 30% in 2019.
Other claims include that the company averaged 20,000 to 60,000 trades per day and had a long history with limited volatility.
The document mentions a fund, dubbed “Virgil Sigma Fund China”, which had a performance fee of 30%. A source said it was a new fund the company had raised capital for. In the document, Virgil claimed that Silvergate, a publicly traded crypto company, served as the fund’s bank.
The document later notes:
“Virgil does NOT invest in tokens or ICOs. Virgil does NOT buy or hold cryptocurrencies for return. The bulk of Virgil’s portfolio is held in fiat money and hedged whenever appropriate . Less than 10% of the Fund is held on any single exchange at any one time, capping the Fund’s exposure to isolated dry markets. “
The aforementioned Journal report noted that in addition to using company assets to pay buyout requests, Qin also used them to pay rent on his luxury apartment in New York City.
© 2021 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.
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