The U.S. Securities and Exchange Commission (SEC) filed an emergency action and obtained an order imposing an asset freeze and other emergency relief against Virgil Capital LLC (www.virgilcap.com) and its affiliated companies in connection with an alleged securities fraud relating to Virgil Capital‘s cryptocurrency trading fund, Virgil Sigma Fund LP. The SEC alleges that the fraud was directed by Stefan Qin, an Australian citizen and part-time resident of New York, who owns and controls the crypto scheme, which solicited $120 Mio in digital assets.
According to the SEC Complaint, Stefan Qin (LinkedIn profile) and his entities have been defrauding investors in the Virgil Sigma Fund since at least 2018 by making material misrepresentations about the fund’s strategy, assets, and financial condition. According to the SEC complaint, the two funds allegedly received a combined total of nearly $120 million in digital assets from about 150 investors.
The scheme misled investors to believe their money was being used solely for crypto trading based on a proprietary algorithm, while Qin and the entities used investment proceeds for personal purposes or for other undisclosed high-risk investments.
Qin and Virgil Capital have told investors who requested redemptions from the Virgil 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. The complaint alleges that no funds were transferred and the redemption requests remain outstanding.
The SEC’s complaint was filed in the Southern District of New York on Dec. 22, 2020. It charges Stefan Qin, Virgil Technologies LLC, Montgomery Technologies LLC, Virgil Quantitative Research LLC, Virgil Capital LLC, and VQR Partners LLC with violations of the antifraud provisions of the federal securities laws, and seeks permanent injunctions, including conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties.