Stefan He Qin, the founder of two cryptocurrency hedge funds, has been sentenced to more than 7 years in prison house after Usa authorities found that he had cheated investors out of $54 million.

A Wed statement from the U.S. Department of Justice (DoJ) announced that U.S. District Judge Valerie Caproni handed Qin a 90-month sentence for defrauding his investors out of $54 one thousand thousand.

The 24-yr-one-time Australian owned and operated two cryptocurrency investment funds between 2022 and 2022 — Virgil Sigma and VQR, the latter of which was founded in February 2022.

Despite Virgil Sigma claiming to invest clients' assets in cryptocurrency arbitrage strategies, the DoJ institute that Qin had embezzled investor upper-case letter from the fund to pay for personal expenses, including nutrient, rent and individual investments, since 2022.

To avert arousing suspicions amidst his investors, Qin created false account statements and bogus revenue enhancement documents claiming the firm had been profitable for every single month from August 2022 except for March 2022.

After regularly lying to his clients regarding the "value, location, and status of their investment capital" — with Sigma claiming $90 million in avails despite Qin having "dissipated nearly all of the investor capital" — Qin sought to steal assets from VQR to pay redemption requests from Sigma'southward investors.

In December 2022, Qin ordered VQR's head trader to air current down all of the fund's positions and transfer the funds to the Australian. Despite alert that the move would incur losses for VQR's investors, the caput trader unwound VQR's positions and forwarded the funds to Qin.

On Feb. 4, 2022, Qin pleaded guilty to one count of securities fraud. In the DoJ'south latest annunciation, U.South. Attorney Audrey Strauss said:

"Qin's brazen and broad-ranging scheme left his beleaguered investors in the lurch for over $54 meg, and he has now been handed the appropriately lengthy judgement of over seven years in federal prison."

Qin has also been ordered to forfeit over $54 million and sentenced to three years of supervised release.

Related: Ohio man pleads guilty to fraud over $30M crypto scam promising fifteen% monthly

Regulators worldwide accept recently highlighted the increasing prevalence of crypto scams, with U.Due south. Securities and Exchange Commission Chair Gary Gensler highlighting at the start of the month how gaps in regulatory protections can endanger consumers.

"Investors may be less skeptical of investment opportunities that involve something new or 'cutting-edge,' or may get defenseless upwardly in the fear of missing out (FOMO)," Gensler warned.

In May, the Federal Merchandise Commission reported consumer losses of more than than $lxxx one thousand thousand on cryptocurrency investment scams since Oct 2022.