The scammer, Stephan Qin is an Australian national
He dropped out of college to run his hedge fund companies in the US
He confessed in the court that he is ashamed of stealing people's money.
Crypto-scammer lived in a penthouse in New York City's Manhattan, US
A US court has sentenced Stefan Qin, a 24-year-old Australian man, to seven and a half years in jail for master-minding a hedge fund scam and duping over a hundred people of around $90 million (Rs. 660 crores approximately). In 2017, Qin had set up a hedge fund called Virgil Sigma Fund LP based in the New York City — where investors could invest money to purchase the cryptocurrency of their choice. Qin informed the US court that he developed a special trading algorithm called “Tenjin” that could generate profits by facilitating the purchase of a cryptocurrency on one exchange and selling it at a higher price on another, taking advantage of the difference in the prices across exchanges.
In 2017, his hedge fund Virgil had yielded an annual return of 500 percent, after which the Wall Street Journal had written a profile on Qin in 2018.
As part of his scam, Bloomberg reported that Qin lured investors by projecting that the invested fund was not exposed to any risk from the fluctuating prices of cryptocurrencies under the pretense of providing a safe space for investors and later used the money for his personal gains.
Qin reportedly began using the investors' capital to pay for his personal expenses and to make illiquid investments in other entities like real estate that had nothing to do with cryptocurrencies as promised to the investors.
In addition, the 24-year-old was also found to have been using a substantial portion of investor capital to invest in crypto-assets like initial coin offerings — that had nothing to do with the fund's stated arbitrage strategy.
As per the US Department of Justice, Qin regularly lied to his investors about the value, location, and status of their investment capital using false account statements and bogus tax documents that he prepared and circulated among his investors.
Calling him “potentially dangerous person”, US District Judge Valerie Caproni said Qin was “deliberately and consciously” choosing to scam his investors in this “white collar crime that is just as devastating to victims as other types of crimes”, the Bloomberg reported added.
Towards the end of 2020, Qin's investors had begun to get suspicious of his intensions and had started asking for their investment back. After that, the US Securities and Exchange Commission reportedly froze his fund's crypto assets, leading to the surrender and arrest of Qin earlier this year.
Several investors who lost their money to this scam had reached out to the court claiming that they have lost their life savings to Qin's fraud.
The 24-year-old has expressed shame at his deeds while revealing that he got into this crypto-space with the intension of making quick and easy money during his days of college.
Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.
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