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The U.S. Securities and Exchange Commission has filed a lawsuit against a cryptocurrency hedge fund founder for fraud. The regulator is seeking an emergency order freezing $25 million in digital assets held by a crypto hedge fund he controls.<\/strong><\/p>\n The U.S. Securities and Exchange Commission (SEC) has sued a crypto hedge fund founder in Manhattan federal court. The regulator alleges that Stefan Qin, a 23-year-old Australian, defrauded investors in his $92.4 million cryptocurrency arbitrage fund, according to Tuesday\u2019s court filing.<\/p>\n Qin founded New York-based Virgil Capital and four other entities. He allegedly fabricated records, failed to redeem $3.5 million for investors, and tried to withdraw $1.7 million of investor funds to pay off Chinese loan sharks, the SEC said. According to Reuters:<\/p>\n The SEC has asked U.S. Judge Lorna Schofield for an emergency order freezing $25 million in digital assets held by another Qin-controlled fund.<\/p>\n<\/blockquote>\n The SEC explained that Qin controls two cryptocurrency funds: the Virgil Sigma Fund and the VQR Multistrategy Fund.<\/p>\n He \u201cclaims to trade for the Sigma Fund by taking a market-neutral \u2018arbitrage approach to the cryptocurrency market,\u2019 utilizing \u2018a proprietary algorithmic trading system that continually scans for price differences between cryptocurrency markets,’\u201d the SEC noted. Qin further claimed that his trading algorithm can \u201cgenerate better returns than an investment in bitcoin.\u201d<\/p>\n The Sigma Fund documentation provided to investors claimed that the fund \u201cheld millions of dollars worth of digital assets at 39 trading platforms, including three of the largest U.S.-based platforms,\u201d the SEC wrote, emphasizing:<\/p>\n In reality, the Sigma Fund held no assets at any of those U.S.-based platforms, and the purported platform account balances were fabricated.<\/p>\n<\/blockquote>\n Moreover, the SEC explained that the crypto hedge fund founder told investors wanting to redeem investments totaling $3.5 million in the middle of this year that their funds would be moved to the VQR Multistrategy Fund. However, in reality, the funds were not transferred.<\/p>\n In December, Qin asked VQR head trader Antonio Hallak to help him withdraw $1.7 million from that hedge fund, according to a declaration by Hallak filed in the case. Qin claimed he had a \u201cliquidity issue\u201d and needed to repay a loan that he had taken out \u201cfrom lenders he feared in China,\u201d the SEC detailed. After Hallak informed him that he could not use the investors\u2019 capital in the VQR Fund, Qin threatened to \u201cfire everyone if necessary\u201d to make the full withdrawal.<\/p>\n <\/ins> <\/ins> <\/p>\n \u201cBank records show that several large wire transfers totaling approximately $2.5 million have been received by the Sigma Fund since June 2020,\u201d the SEC continued. \u201cApproximately $1.3 million of the $2.5 million was transferred by Qin first to a foreign bank account in the Sigma Fund\u2019s name and then transferred immediately to a U.S. bank account in Qin\u2019s name.\u201d<\/p>\n The SEC has asked the court to permanently restrain Qin and his companies from participating in \u201cthe issuance, purchase, offer, or sale of any security,\u201d as well as order them to \u201cdisgorge their ill-gotten gains according to proof, plus prejudgment interest\u201d and pay civil penalties.<\/p>\n What do you think about Qin\u2019s case? Let us know in the comments section below.<\/strong><\/em><\/p>\n The post US Regulator Sues Crypto Hedge Fund Founder \u2014 $25 Million in Digital Assets to Be Frozen<\/a> appeared first on Bitcoin News<\/a>.<\/p>\nCrypto Hedge Fund Founder Sued in the US<\/h2>\n
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