An Australian man, founder of two multi-million crypto funds in New York, pleaded guilty on a crypto scam charge. The Ponzi scheme used a trading algorithm, taking advantage of price differences for Bitcoin and other cryptocurrencies.
Draining almost $90M From Investors
According to a recent report, Stefan He Qin organized the fraud that stole about $90 million from clients through his hedge funds – Virgil Sigma Fund LP (“Virgil Sigma”) and the VQR Multistrategy Fund LP (“VQR”). The two cryptocurrency hedge funds, located in New York, attracted over $100M of investments.
In a few years, the Australian managed to steal investor’s money from the Virgil Sigma fund. In December 2020, he made another attempt for a classic Ponzi scheme, stealing clients’ money from VQR in order to pay back his investors in Virgil Sigma.
Qin was charged with one count of securities fraud and pled guilty in Manhattan federal court.
“Stefan He 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”, said U.S. Attorney Audrey Strauss.
Later on, Qin admitted his attempt to steal funds from another fund he controlled to meet the redemption demands of the deceived investors from the former fund.
As per the court statement, the multi-million investment hedge funds Virgil Sigma and VQR packed Qin with slush funds for his extravagant lifestyle.
The Australian used Virgil Sigma to employ a strategy to earn profits from arbitrage opportunities in the cryptocurrency market. The scam stepped on a trading algorithm, taking advantage of price differences for several cryptocurrencies, including Bitcoin, in about 40 different exchanges worldwide.
QIN pled guilty to one count of securities fraud. This charge carries a maximum sentence of 20 years in prison.
Crypto Scams Becoming Even More Creative
Crypto frauds seem to be on the rise lately. Scammers have become quite resourceful, coming up with different ways to get to investors’ funds.
As CryptoPotato reported, recent research showed that in about one week, fraudsters stole at least $587K from unsuspecting individuals using the old “send me X amount crypto, and I’ll double it” scenario.
In recent cases, scammers have used bots impersonating or replying to verified Twitter accounts, such as the Winklevoss twins or Elon Musk.
These bots affirm they’ve received money from crypto celebrities and attach links to a giveaway that invites individuals to deposit money to a cryptocurrency address to receive twice the amount immediately. The result, of course, was thousands of deceived.