A former cryptocurrency executive, who raised more than $ 90 million for an investment fund, was sentenced on Wednesday to more than 7 years in prison for executing what prosecutors described as a Ponzi scheme.
Stefan Qin, 24, directed LP Virgil Sigma Fund for three years until 2020. He pleaded guilty in February and was sentenced on Wednesday.
“I abused their trust in immoral and illegal ways to drive my success,” Qin said, referring to his swindled investors.
The Justice Department said in a February statement:
“Stefan He Qin drained almost all of the assets of the $ 90 million cryptocurrency fund he owned, stealing money from investors, spending it on indulgences and speculative personal investments, and lying to investors about the fund’s performance and what it had done. with their money “.
In March 2020, a well-placed investor in the market shared an informative presentation that Virgil was sending to investors as part of an effort to raise more funds. The U.S. attorney’s office in New York’s southern district claimed the former hedge funder scammed more than 100 investors, The Wall Street Journal reported.
“We sniffed it out pretty quickly because the numbers didn’t make sense,” the investor said. “Performance and market figures seemed disabled. While the arbitration strategies at the time were lucrative, the figures he was talking about made no sense. “
The field said the company “pursues opportunities in the face of traditionally risky indicators for cryptocurrencies, such as extreme volatility, high barriers to entry and the emergence of cross-border trade by taking advantage of arbitrage opportunities globally.”
He shared his statements, which he claimed had been audited:
The firm claimed to return more than 100% in 2018, a year in which cryptocurrency prices fell, which many call cryptocurrency winter. He said it returned 30% in 2019.
Other claims include that the company made an average of 20,000-60,000 daily transactions and that it had a long history with limited volatility.
The document mentions a fund, called the “Virgil Sigma Fund China,” which had a 30% return commission. A source said it was a new fund for which the firm had been raising capital. In the document, Virgil claimed that Silvergate — a listed cryptocurrency company — served as the fund’s bank.
The document notes below:
“Virgil does NOT invest in tokens or ICOs. Virgil does NOT buy and hold cryptocurrencies to return them. Most of Virgil’s portfolio is held in fiat currency and is hedged where and when appropriate. Less than 10% of the fund is maintains at any given time a single change, limiting the Fund’s exposure to isolated segments “.
The aforementioned report from the Journal noted that in addition to using the firm’s assets to pay for repayment claims, Qin also used it to pay the rent for his luxury apartment in New York.
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