SEC Obtains Emergency Asset Freeze Against Virgil Capital, Charges Founder with Fraud
- The SEC has ordered an asset freeze against crypto fund Virgil Capital.
- Virgil Capital and its founder Stefan Qin are accused of misappropriating investor funds.
United States Securities and Exchange Commission building. SEC
The U.S. Securities and Exchange Commission (SEC) has obtained an order imposing an asset freeze and other emergency relief against cryptocurrency fund Virgil Capital.
According to a press release published on 28 December, the SEC has frozen all of the assets belonging to the crypto fund and its affiliated companies in connection to an alleged securities fraud.
The regulator accused Stefan Qin, owner of Virgil Capital, of defrauding investors in his Sigma Fund since at least 2018. Qin and his companies — Virgil Technologies LLC, Montgomery Technologies LLC, Virgil Quantitative Research LLC, Virgil Capital LLC, and VQR Partners LLC — have been charged with violations of the antifraud provisions of the federal securities laws.
The complaint alleges that Qin and his companies used investment proceeds from the Virgil Sigma Fund for personal purposes. Investors who requested redemptions from the Sigma Fund were told that their interest would be transferred to another fund controlled by Qin.
However, investors claimed the funds weren’t transferred, and that redemption requests made since July 2020 remain outstanding. The SEC obtained an emergency asset freeze against Qin because the official complaint alleges that he is “actively” attempting to misappropriate assets from the second fund and raise new investments in the Sigma Fund.
Kristina Littman, the Chief of the SEC Enforcement Division’s Cyber Unit, said the emergency action is an important stem to protect investor assets and prevent further harm.
- During an interview with FT, CEO Brian Armstrong said that before the lawsuit a SEC staff member had said that all crypto except BTC was security, and should be delisted.
- When asked how he came to that conclusion, the SEC staff member reportedly said “we’re not going to explain it to you, you need to delist every asset other that Bitcoin”.
Coinbase CEO Brian Armstrong appears on stage at the 2014 TechCrunch Disrupt Europe/London, at The Old Billingsgate on October 21, 2014 in London, England. Anthony Harvey/Getty Images for TechCrunch
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- The institutional sale of the token, however, did violate federal securities laws, and the lawsuit between the SEC and Ripple will have to go to trial.
- The U.S. SEC, CFTC, and FTC have all filed separate lawsuits against bankrupt crypto lender Celsius and its former CEO Alex Mashinsky, charging them with multiple counts of fraud.
- Mashinsky was also arrested in New York on Thursday, and later charged by the Department of Justice with securities fraud, commodities fraud, and wire fraud.