U.S. Securities and Exchange Commission seeks an emergency freeze order of $25 million in digital assets controlled by a crypto hedge fund. This is after the regulator filed a fraud case against the Virgil Capital founder.
The founder was sued in Manhattan court in the United States. According to regulators, Stefan Qin scammed investors in his cryptocurrency arbitrage fund worth $ 92.4million. US SEC revealed all these in the court filing.
Qin supported Virgil Capital from New York together with four other entities. However, it is claimed that Stefan failed to redeem $3.5 million for investors. Instead, he tried withdrawing capital funds amounting to $1.7 million to pay off Chinese loan sharks.
The US SEC has requested the U.S. choose Lorna Schofield for an emergency freeze of $25million in digital assets controlled by another Qin’s fund.
According to the US SEC, Stefan controls two cryptocurrency funds: the VQR Multistrategy Fund and the Vergil letter of the alphabet Fund.
“Stefan claims to be trading for Sigma Fund. He does that by using the market-neutral arbitrage approach to the cryptocurrency market. Stefan uses a propriety algorithmic trading system. The system scans the price difference between cryptocurrency markets.”
According to Qin, his mercantilism algorithmic program would generate higher returns than the associate degree investment in BTC (bitcoin). Documentation of the alphabet Fund’s letter, which was offered to investors, claimed the fund held several greenbacks digital assets price at thirty-nine mercantilism platforms and three other biggest platforms based in the U.S.
The alphabet Fund control letter has no assets in any of these U.S.-based platforms. It means that the putative platform account balances were fictional. The US SEC also revealed that Stefan Qin requested investors eager to redeem investment worth $3.5 million in the middle of this year. He opted to divert all the funds to the VQR Multistrategy Fund. However, there was no transfer of funds.
Qin requested VQR head monger Antonio Hallak to help him withdraw $1.7million from the hedge fund in the Gregorian calendar month. He claimed that he was encountering a liquidity issue and had to repay a loan he had taken out from the lenders he feared in China. However, Antonio Hallak told him that it was impossible to use the investors’ capital within the VQR Fund. Qin opted to fire everybody if necessary to enable him to create a total withdrawal.
“The bank records reveal most of the huge wire transfers totaling to more or less than $ 2.5 million were being received by letter of the alphabet Fund since June 2020,” SEC continued. “Up to $1.3 million of the $ 2.5 million have been transferred by Stefan to a remote checking account. The account is within the letter of the alphabet Fund’s name. After that, the amount was transferred to a U.S. checking account in Stefan’s name instantly.”
The US SEC has requested the court to restrain Stefan or any of his firms from being involved in providing purchase, sale, or offer to any security. The SEC also asked the court to order Stefan and any firm related to him to disgorge all the gains they acquired wrongly to prove together with prejudgment interest and make payment to civil penalties.
The Crypto Hedge Fund platform makes it possible for individuals to invest in a mix of cryptocurrencies like Crypto CopyFund that are carefully selected. The fund offers investors the ability to mirror BTC (Bitcoin) and other established coins like Dash, ETH (Ethereum), and XRP (Ripple) movements in the market. The hedge funds depend on analysts’ teams and the fund’s visionary founder to help guide money in the right direction. The size of the team looks small when compared to the revenues. However, the number is compensated by the team members’ years of experience.