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Crypto Hedge Fund Fraudster Sentenced to Seven Years in Jail

Key Takeaways

  • Stefan He Qin, a 24-year-old faculty dropout was sentenced to seven and a half years in jail for securities fraud.
  • Qin ran two fraudulent Manhattan-based crypto hedge funds with over $100 million in property between 2017 and 2020.
  • On Thursday, Qin pleaded responsible to embezzling greater than $54 million from buyers.

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Stefan He Qin, the 24-year-old founding father of two New York-based cryptocurrency hedge funds, has pleaded responsible to securities fraud, receiving a seven and a half 12 months jail sentence and a $54 million high-quality.

Stefan He Qin: I Thought Life Was a Video Sport

Stefan He Qin pleaded responsible to operating a $100 million Ponzi scheme, defrauding buyers out of greater than $54 million.

In accordance with a Thursday Division of Justice (DOJ) press release, the 24-year-old faculty dropout ran two New York-based cryptocurrency hedge funds with over $100 million in property underneath administration. After pleading responsible to securities fraud in Feb. 2021, Qin was sentenced to 90 months in jail and ordered to forfeit $54 million on Thursday.

In 2016, Qin began a crypto hedge fund referred to as Virgil Sigma. The fund promised buyers 500% annual returns via a proprietary “market impartial” and supposedly “protected” funding technique that claimed to use arbitrage alternatives throughout totally different exchanges. 

Qin’s fund amassed $23.5 million in property underneath administration through the first 12 months of operations, resulting in him being featured within the Wall Avenue Journal. Banking on the notoriety, by 2020, the Virgil fund had raised greater than $90 million, prompting the younger faculty dropout to start out a second fund, referred to as VQR, which amassed a further $24 million in property underneath administration.

Regardless of claiming to speculate the property in cryptocurrency arbitrage methods, the DOJ discovered that since 2017, Qin had engaged in a scheme to steal property from Virgil Sigma and defraud its buyers. As an alternative of investing the fund’s property, Qin embezzled the investor’s capital and used the cash to pay for private bills, together with meals, companies, and lease for a $23,000 a month Manhattan penthouse. Furthermore, Qin additionally used the fund’s capital to make private investments in actual property and preliminary coin choices (ICO).

Because of his reckless habits, Qin quickly used up practically all of Virgil Sigma’s capital. “Qin’s buyers quickly found that his methods weren’t far more than a disguised means for him to embezzle and make unauthorized investments with shopper funds,” mentioned Manhattan US Legal professional Audrey Strauss in an announcement. 

Confronted with redemption requests Qin may now not fulfill, he doubled down on his scheme by trying to steal property from his second fund, VQR, to cowl his tracks. Talking earlier than the choose, Qin mentioned:

“As an alternative of coming clear I did the worst factor and doubled down on my lies… I believed I used to be the principle protagonist and life was a online game and I had simply discovered the cheat code to beat it. As we all know, life isn’t a online game.”

Qin turned himself in to U.S. authorities in February this 12 months, pleading responsible on the identical day. Whereas he confronted as a lot as 20 years in jail, on account of his clear report and voluntary return, he was sentenced to seven and a half years in jail and ordered to forfeit the $54 million stolen from shoppers.

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