- Stefan He Qin, a 24-year-old college dropout was sentenced to seven and a half years in prison for securities fraud.
- Qin ran two fraudulent Manhattan-based crypto hedge funds with over $100 million in assets between 2017 and 2020.
- On Thursday, Qin pleaded guilty to embezzling more than $54 million from investors.
Stefan He Qin, the 24-year-old founder of two New York-based cryptocurrency hedge funds, has pleaded guilty to securities fraud, receiving a seven and a half year prison sentence and a $54 million fine.
Stefan He Qin: I Thought Life Was a Video Game
Stefan He Qin pleaded guilty to running a $100 million Ponzi scheme, defrauding investors out of more than $54 million.
According to a Thursday Department of Justice (DOJ) press release, the 24-year-old college dropout ran two New York-based cryptocurrency hedge funds with over $100 million in assets under management. After pleading guilty to securities fraud in Feb. 2021, Qin was sentenced to 90 months in prison and ordered to forfeit $54 million on Thursday.
In 2016, Qin started a crypto hedge fund called Virgil Sigma. The fund promised investors 500% annual returns through a proprietary “market neutral” and supposedly “safe” investment strategy that claimed to exploit arbitrage opportunities across different exchanges.
Qin’s fund amassed $23.5 million in assets under management during the first year of operations, leading to him being featured in the Wall Street Journal. Banking on the notoriety, by 2020, the Virgil fund had raised more than $90 million, prompting the young college dropout to start a second fund, called VQR, which amassed an additional $24 million in assets under management.
Despite claiming to invest the assets in cryptocurrency arbitrage strategies, the DOJ found that since 2017, Qin had engaged in a scheme to steal assets from Virgil Sigma and defraud its investors. Instead of investing the fund’s assets, Qin embezzled the investor’s capital and used the money to pay for personal expenses, including food, services, and rent for a $23,000 a month Manhattan penthouse. Moreover, Qin also used the fund’s capital to make personal investments in real estate and initial coin offerings (ICO).
As a result of his reckless behavior, Qin soon used up nearly all of Virgil Sigma’s capital. “Qin’s investors soon discovered that his strategies weren’t much more than a disguised means for him to embezzle and make unauthorized investments with client funds,” said Manhattan US Attorney Audrey Strauss in a statement.
Faced with redemption requests Qin could no longer fulfill, he doubled down on his scheme by attempting to steal assets from his second fund, VQR, to cover his tracks. Speaking before the judge, Qin said:
“Instead of coming clean I did the worst thing and doubled down on my lies… I thought I was the main protagonist and life was a video game and I had just found the cheat code to beat it. As we know, life is not a video game.”
Qin turned himself in to U.S. authorities in February this year, pleading guilty on the same day. While he faced as much as 20 years in prison, on account of his clean record and voluntary return, he was sentenced to seven and a half years in prison and ordered to forfeit the $54 million stolen from clients.
$54 Million AI-Based Crypto Scam Uncovered in Japan
Four men have been arrested in Japan on suspicion of running a fraudulent AI-driven crypto investment scheme. Group in Japan Accused of Raising $54 Million In a one-of-a-kind fraud case,…
YouTuber TechLead Accused of Scam as Million Token Plummets
TechLead, a YouTuber with over 1.1 million subscribers, has been accused of scamming his community after he launched his own cryptocurrency. TechLead Accused of Duping Followers TechLead, a former Google…
Efficient Market Hypothesis: Does Crypto Follow?
The Efficient Market Hypothesis (EMH) is a concept in financial economics which states that security prices reflect all the available information about a financial instrument. EMH is one of the…
Tether Executives Face Criminal Probe From U.S. DoJ
The world’s largest stablecoin provider, Tether, is facing a criminal probe from the U.S. Department of Justice following allegations that the company committed bank fraud. Tether Investigated for Bank Fraud …
FaZe Clan Punishes Members for Alleged Crypto Scam
Prominent esports organization FaZe Clan has dropped one member and suspended three others after their alleged involvement in a pump-and-dump style crypto scam. FaZe Clan Denies Involvement in Scam FaZe…