Stefan Qin, founder of New York hedge funds Virgil Sigma and VQR Multistrategy, has been sentenced to seven and a half years in prison. The prosecutor’s office claims he stole over $54 million from investors.
Qin promised his clients high returns, claiming he uses a proprietary algorithmic trading method to profit from the price differential of a number of cryptos. According to the US Department of Justice, Virgil Sigma managed assets worth more than $90 million, and the structure’s marketing materials indicate it was profitable from August 2016 to the present (excluding March 2017).
However, in reality, Virgil Sigma was unprofitable, and Qin spent the investors’ funds on personal needs. For example, he invested in high-risk ventures, including ICOs, and rented himself a penthouse for $23,000 a month.
“I thought life was a video game, and I am its protagonist. It’s like I found a cheat code that allows me to win. But as we know, life is not a game,” Bloomberg quotes Qin.
At the end of 2020, as losses grew, investors started to demand their money back. To pay them off, Qin tried to extract funds from another controlled structure – VQR Multistrategy. He also planned to divest nearly $2 million in client assets to pay off Chinese suppliers from whom he borrowed.
After numerous complaints from investors, the US Securities and Exchange Commission (SEC) obtained an asset freeze for Virgil Capital, which the regulator accused of securities fraud.