Cryptocurrency hedge fund founder faces 7.5 years in jail for embezzling funds

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The founding father of two now-defunct cryptocurrency hedge funds has been sentenced to seven and a half years in US jail for embezzling and making unauthorised investments with consumer funds.

US District Choose Valerie Caproni discovered that Australian nationwide Stefan He Qin, the founding father of Virgil Sigma Fund LP and VQR Multistrategy Fund LP, siphoned away tens of millions of {dollars} of traders’ funds to pay for his extravagant way of life.

The jail sentence comes half a yr after Qin was charged with safety fraud by the Division of Justice.

The Virgil Sigma fund as soon as claimed to have over $90 million underneath administration from dozens of traders. Virgil Sigma gained these funds from promoting to traders that it was a “market-neutral” fund, that means it was not uncovered to any threat from the worth of cryptocurrency transferring up or down. 

In the meantime, VQR was a fund that employed quite a lot of buying and selling methods aimed toward incomes cash primarily based on the fluctuations within the worth of cryptocurrency.

From 2017, quite than investing Virgil Sigma’s fund property with a “market-neutral” buying and selling technique as marketed, Qin embezzled investor capital from Virgil Sigma and used these funds for private bills, private illiquid investments, and crypto-assets that had nothing to do with the fund’s said arbitrage technique.

Among the many private bills and investments had been hire for a New York Metropolis penthouse house and buying actual property.

Qin additionally often lied to the fund’s traders concerning the worth, location, and standing of their funding capital, together with by circulating false account statements and bogus tax paperwork to traders.

In 2020, when Virgil Sigma purchasers issued redemption requests that Qin couldn’t fulfil, he then doubled down on his scheme by trying to plunder funds from VQR to fulfill his sufferer traders’ calls for. 

By this level, nonetheless, traders had found the fraud, the courtroom discovered. 

Because of these fraudulent actions, Qin misplaced almost $55 million of traders’ funds.

Along with the 7.5-year jail sentence, Qin has been sentenced to 3 years of supervised launch, and ordered to forfeit the stolen funds.

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