The US Securities and Exchange Commission [SEC] revealed filing an emergency action as well as obtaining an order to impose an asset freeze and other emergency relief against quantitative trading firm Virgil Capital in Manhattan federal court.
Its affiliated companies were also included in connection with an alleged securities fraud relating to Virgil Capital’s flagship cryptocurrency trading fund, Virgil Sigma Fund LP.
According to the official release, Stefan Qin, the 23-year-old Australian hedge fund founder, Virgil Capital, has been accused by the SEC and his entities of defrauding investors in the Sigma Fund since at least 2018 by making material misrepresentations about the fund’s strategy, assets, and financial condition.
Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit stated,
“This emergency action is an important step to protect investor assets and prevent further harm. Qin allegedly made false promises to lure investors and then continued his deception to conceal his misuse of investor funds.”
The SEC complaint also alleged that Qin and the entities “misled” investors to believe their money was being used only for cryptocurrency trading based on a proprietary algorithm, while the defendants, in fact, utilized the funds for investment proceeds for personal purposes or for other undisclosed high-risk investments.
Furthermore, SEC also stated in its complaint that Qin and Virgil Capital have told investors who requested redemptions from the Sigma Fund that their interests would be transferred instead to another fund under the ultimate control of Qin but with separate management and operations, the VQR Multistrategy Fund LP.
Despite the requests, the complaint claimed that no funds were transferred to the investors and the redemption requests remained outstanding and that Qin attempted to misappropriate assets from the VQR Fund and to secure new investments in the Sigma Fund.
According to reports, Sean Hecker and Shawn Crowley of Kaplan Hecker & Fink were representing Qin. In an official statement, the law firm went on to say that Qin intends to fully cooperate with the regulator to provide a “fulsome set of facts” and was “committed to ensuring that no investors are harmed.”