Fun

US Regulator Sues Crypto Hedge Fund Founder — $25 Million in Digital Assets to Be Frozen

News Feed - 2020-12-27 07:12:00

US Regulator Sues Crypto Hedge Fund Founder — $25 Million in Digital Assets to Be Frozen


The U.S. Securities and Exchange Commission has filed a lawsuit against a cryptocurrency hedge fund founder for fraud. The regulator is seeking an emergency order freezing $25 million in digital assets held by a crypto hedge fund he controls. Crypto Hedge Fund Founder Sued in the US


The U.S. Securities and Exchange Commission (SEC) has sued a crypto hedge fund founder in Manhattan federal court. The regulator alleges that Stefan Qin, a 23-year-old Australian, defrauded investors in his $92.4 million cryptocurrency arbitrage fund, according to Tuesday’s court filing.


Qin founded New York-based Virgil Capital and four other entities. He allegedly fabricated records, failed to redeem $3.5 million for investors, and tried to withdraw $1.7 million of investor funds to pay off Chinese loan sharks, the SEC said. According to Reuters: The SEC has asked U.S. Judge Lorna Schofield for an emergency order freezing $25 million in digital assets held by another Qin-controlled fund.


The SEC explained that Qin controls two cryptocurrency funds: the Virgil Sigma Fund and the VQR Multistrategy Fund.


He “claims to trade for the Sigma Fund by taking a market-neutral ‘arbitrage approach to the cryptocurrency market,’ utilizing ‘a proprietary algorithmic trading system that continually scans for price differences between cryptocurrency markets,"” the SEC noted. Qin further claimed that his trading algorithm can “generate better returns than an investment in bitcoin.”


The Sigma Fund documentation provided to investors claimed that the fund “held millions of dollars worth of digital assets at 39 trading platforms, including three of the largest U.S.-based platforms,” the SEC wrote, emphasizing: In reality, the Sigma Fund held no assets at any of those U.S.-based platforms, and the purported platform account balances were fabricated.


Moreover, the SEC explained that the crypto hedge fund founder told investors wanting to redeem investments totaling $3.5 million in the middle of this year that their funds would be moved to the VQR Multistrategy Fund. However, in reality, the funds were not transferred.


In December, Qin asked VQR head trader Antonio Hallak to help him withdraw $1.7 million from that hedge fund, according to a declaration by Hallak filed in the case. Qin claimed he had a “liquidity issue” and needed to repay a loan that he had taken out “from lenders he feared in China,” the SEC detailed. After Hallak informed him that he could not use the investors’ capital in the VQR Fund, Qin threatened to “fire everyone if necessary” to make the full withdrawal.



“Bank records show that several large wire transfers totaling approximately $2.5 million have been received by the Sigma Fund since June 2020,” the SEC continued. “Approximately $1.3 million of the $2.5 million was transferred by Qin first to a foreign bank account in the Sigma Fund’s name and then transferred immediately to a U.S. bank account in Qin’s name.”


The SEC has asked the court to permanently restrain Qin and his companies from participating in “the issuance, purchase, offer, or sale of any security,” as well as order them to “disgorge their ill-gotten gains according to proof, plus prejudgment interest” and pay civil penalties.


What do you think about Qin’s case? Let us know in the comments section below. Biden Administration May Roll Back Some Crypto Regulations, Top Banking Regulator Warns Russian Parliament Foresees a Wave of Token Issuance for 2021 in the Wake of Crypto Law Promulgation Tags in this story chinese fund manager, chinese loan sharks, crypto fund founder, crypto fund manager, crypto hedge fund, Fraud, fraudulent schemes, sec lawsuit


Image Credits: Shutterstock, Pixabay, Wiki Commons Use Bitcoin and Bitcoin Cash to play online casino games here. Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments

News Feed

Nevada Man Pleads Guilty in $722 Million Fraudulent Cryptocurrency Scheme
Nevada Man Pleads Guilty in $722 Million Fraudulent Cryptocurrency Scheme A Nevada man has admitted his role in laundering funds solicited for the Bitclub Network, a $722 million f
Estonia Clarifies Upcoming Regulations, Will Not Ban Crypto Holding or Trading
Estonia Clarifies Upcoming Regulations, Will Not Ban Crypto Holding or Trading The government of Estonia has approved legislation tailored to improve oversight of its crypto sector
Pepe Battles Price Decline, But Analysts Signal A Potential Rally Ahead
Este artículo también está disponible en español. Pepe [PEPE] is currently trading at approximately $0.000000900 and is undergoing a challenging period. The Relative Stre
Bitcoin, Ethereum Technical Analysis: ETH Above $1,600 as Markets Begin to Anticipate Fed Rate Decision
Bitcoin, Ethereum Technical Analysis: ETH Above $1,600 as Markets Begin to Anticipate Fed Rate Decision Ethereum was trading above $1,600 on Monday, as markets prepared for the lat
Franklin Templeton goes ‘full degen’ with investor note on memecoins
Martin Young2 hours agoFranklin Templeton goes ‘full degen’ with investor note on memecoinsThe trillion-dollar asset manager said memecoins such as Dogecoin “have no inherent value or utility” but have the potent
Bitcoin To Infinity? Venture Capitalist Says Crypto’s Value Vs. Dollar Has No Ceiling
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Bitcoin Halving Approaches: Less Than 400 Days Until Block Reward Subsidy Is Cut in Half
Bitcoin Halving Approaches: Less Than 400 Days Until Block Reward Subsidy Is Cut in Half According to current statistics, the Bitcoin network is fewer than 56,000 blocks away and l
45% of Bitcoin supply has not moved in 6 months — Research
William Suberg12 minutes ago45% of Bitcoin supply has not moved in 6 months — ResearchA healthy portion of Bitcoin hodlers refuse to let go of their coins no matter what BTC price action delivers.73 Total viewsListen t
Russian Ruble Taps 7-Year High Against the US Dollar — Economist Says ‘Don’t Ignore the Exchange Rate’
Russian Ruble Taps 7-Year High Against the US Dollar — Economist Says "Don’t Ignore the Exchange Rate" Recent news reports have detailed that Russia’s fiat currency, the
Russia’s Interior Ministry Employs Tool to Identify Crypto Wallet Owners, Track Transactions
Russia’s Interior Ministry Employs Tool to Identify Crypto Wallet Owners, Track Transactions The Russian Ministry of Internal Affairs is now using a digital tool allowing officer
Report: Uniswap Seeks to Raise $200 Million in Fresh Capital at $1 Billion Valuation
Report: Uniswap Seeks to Raise $200 Million in Fresh Capital at $1 Billion Valuation The largest decentralized exchange (dex) platform by global trade volume, Uniswap, is looking t
Fortune favors something — Eminem takes Crypto​.com mantle from Matt Damon
Turner Wright7 hours agoFortune favors something — Eminem takes Crypto​.com mantle from Matt DamonSlim Shady was the latest celebrity to advertise “fortune favors the brave” for Crypto.com following Matt Damon’