The U.S. Securities and Exchange Commission (SEC) has accused the founder of hedge fund Virgil Capital, which specializes in cryptocurrency arbitrage, of fraud.
- Stefan Qin, the 23-year-old founder of Virgil Capital, has been accused by the SEC of “fabricated records” for failing to redeem $3.5 million in investments and attempting to withdraw $1.7 million in investor funds to pay off Chinese loan sharks, the SEC said.
- On Tuesday, the SEC applied to U.S. District Judge Lorna Schofield in the Southern District of New York for an emergency order to suspend $25 million in digital assets owned by another fund managed by Qin.
- The SEC accuses Qin of fraud involving the Virgil Sigma Fund LP of New York and VQR Multistrategy Fund LP of the Cayman Islands.
- The hedge fund manager is being accused of altering spreadsheet tracking investments at 39 cryptocurrency trading platforms in 2019.
- Earlier this year Qin falsely informed investors looking to redeem $3.5 million investments from their funds that the money would be moved to the VQR Multistrategy Fund but the funds were not transferred, according to the SEC.
- Qin also asked VQR head trader Antonio Hallak to assist with withdrawing $1.7 million from the fund, claiming he had borrowed money from Chinese loan sharks to invest in the Sigma fund, according to Reuters.
- Qin, whom the SEC said is believed to be currently in South Korea, is prepared to cooperate with the SEC and is "committed to ensuring that no investors are harmed," said his lawyers, Reuters said.
- The SEC is seeking an order permanently restraining Qin from participating in the sale, issuance, purchase or offer of any security except on his personal account, a disgorgement of profits and civil penalties.