Crypto Fund Manager Sentenced to 7.5 Years in Prison
- The Australian national embezzled almost $55 million in investor funds for personal gain.
- He ran and operated the Virgil Sigma Fund and VRQ Multistrategy Fund in New York from 2017 to 2020.
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Stefan He Qin, the founder of two now-defunct cryptocurrency hedge funds, has been sentenced to seven and a half years in prison for embezzling. According to the U.S. Department of Justice, Qin was also sentenced to three years of supervised release and ordered to forfeit over $54.7 million. Earlier in February, Qin plead guilty to one count of securities fraud before U.S. District Judge Valerie E. Caproni, who imposed today’s sentence.
The 24-year old Australian national owned and ran two cryptocurrency hedge funds in New York between 2017 and 2020 — the Virgil Sigma Fund and the VQR Multistrategy Fund. The Virgil Sigma Fund reportedly had over $90 million under management from dozens of investors around the world, which Qin secured by advertising it as a “market-neutral” fund. Qin claimed the fund wasn’t at risk from crypto price movements and therefore provided a relatively safe and liquid investment for those looking for crypto exposure.
The Department of Justice found that Qin had been embezzling funds from the Virgil Sigma Fund from 2017. Rather than investing the fund’s asset in cryptocurrency arbitrage trading, Qin used the funds to pay for personal expenses and make personal, illiquid investments in real estate.
As a result of these fraudulent activities, Qin dissipated nearly all of the investor capital in Virgil Sigma Fund and lied to the fund’s investors about the status of their investment capital. In 2020, when the fund’s clients issued redemption requests that Qin couldn’t fill, he attempted to wind down all trading positions from VQR and transfer the funds to Virgil Sigma.
- The New York Jurors took 4 fours of deliberating before pronouncing the former FTX CEO guilty of all seven charges of fraud and conspiracy to commit fraud.
- Bankman-Fried will now have to appear in court on 28 March, 2024, where he will face a potential maximum sentence of 115 years in prison.
Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
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- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.
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- A spokesperson for the Manhattan U.S. attorney’s office, which brought the charges against Do Kwon, said the Department of Justice (DoJ) will seek his extradition.