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Australian National Sentenced To 90 Months In Prison For Crypto Fund Fraud

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An Australian national was sentenced to 90 months in prison after pleading guilty to one count of securities fraud before U.S. District Judge in the Southern District of New York, according to a statement by the U.S. Department of Justice (DoJ).

24-year old Stefan He Qin pled guilty of conspiring to steal investor money from a pair of New York-based cryptocurrency hedge funds that he owned and controlled.

Qin is the founder of two multimillion-dollar cryptocurrency hedge funds in New York - Virgil Sigma Fund LP and VQR Multistrategy Fund LP - which have over $100 million in investments.

According to the complaint, Qin stole investor money from Virgil Sigma between 2017 through 2020 and then he tried to steal investor money from VQR to pay back his investors in Virgil Sigma later in December 2020. Until recently, VQR had at least approximately $24 million under management from investors.

In the course of stealing assets from Virgil Sigma, Qin regularly lied to the fund's investors about the value, location, and status of their investment capital. Virgil Sigma had over $90 million under management from dozens of investors, including many in the U.S.

Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors' money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money, the DoJ said.

Qin then attempted to steal money from another fund he controlled to meet redemption demands of the defrauded investors in the former fund. They were revealed to be slush funds for Qin to live his extravagant lifestyle.

A substantial portion of investor capital stolen from Virgil Sigma was used to pay for personal expenses, such as food, services, and rent for a penthouse apartment in New York City. It was also used to make personal, often illiquid investments in other entities that had nothing to do with cryptocurrencies.

Qin's brazen and wide-ranging scheme left his beleaguered investors in the lurch for over $54 million. Qin was also sentenced to three years of supervised release, and ordered to forfeit $54.79 million.

For the success of his criminal scheme, Qin made misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency firms, all the while stealing the hard-earned money of his investors. He mastered the art of trickery by representing these firms as profitable investment strategies.

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