TL;DR Breakdown
- Crypto Ponzi operator sentenced to jail for seven years.
- Qin deceived investors whereas he used clients investment to fund his lavish lifestyle.
The United States Department of Justice (DOJ) has sentenced Stefan Qin, a crypto Ponzi operator to 90 months in prison after being found guilty of duping unsuspecting investors to the tune of $100 million.
Qin, an Australian national, operated two cryptocurrency investment funds (Virgil Sigma and VQR) with both firms headquartered in New York. Both firms ran a crypto Ponzi as they collected money from investors and stake on arbitrage trading strategies.
He touted the firms as “market-neutral,” meaning that the volatility of the digital market does not expose their clients to any risks.
Per a release by the DOJ, one of the firms, Virgil Sigma, only failed not to make a profit in one month since it began operation in March 2017.
The convict who kept close contact with his clients used it as a bragging strategy and always touted the success of his investment funds. His operation was so clean it reached the Wall Street Journal pages after Virgil Sigma had yielded an annual return of 500% in 2017.
However, his cover was blown after investors eventually discovered his strategies weren’t much more than a disguised means for him to embezzle and make unauthorized investments with client funds.
Qin used the client’s investments to fund his expensive lifestyle, such as renting a luxurious penthouse apartment in New York and eating expensive meals. He also used a substantial portion of the investors’ capital to make allocations in other entities that are not related to cryptocurrencies.
Apart from a seven-year jail sentence, the DOJ also ordered that his investment funds cease operations and he would forfeit almost $55 million of the stolen funds.
Another crypto Ponzi operator bags 15-year jail term
Cases of crypto Ponzi investments have become prevalent recently, with the DOJ having to settle many cases recently.
Another crypto Ponzi operator who was recently sentenced is Roger Nils-Jonas Karlsson, who resided in Sweden. He was sent to prison for 15 years after luring more than 3,500 people into a fraudulent Bitcoin investment scheme.
He assured investors that their crypto investment was in safe hands. However, he used the fund to enrich himself and to acquire a resort in Thailand, luxurious condos, and even a racehorse. His sentence was reduced after he pleaded to charges slammed against him.
