SEC Imposes Emergency Asset Freeze against Crypto Fraud Virgil Capital

​The Securities and Exchange Commission (SEC) announced that it has imposed an emergency asset freeze and other emergency relief against Virgil Capital LLC, for involving in an alleged securities fraud relating to Virgil Capital's flagship cryptocurrency trading fund, Virgil Sigma Fund LP.

Directed by Stefan Qin, the fund has defrauded investors by making material misrepresentations about the fund's strategy, assets, and financial condition since at least 2018. The complaint alleges that the defendants misled investors to believe their money was being used solely for cryptocurrency trading based on a proprietary algorithm, while Qin and the entities used investment proceeds for personal purposes or for other undisclosed high-risk investments.

Further, since at least July 2020, Qin and Virgil Capital have told investors who requested redemptions from the Sigma Fund that their interests would be transferred instead to another fund. However, the complaint alleges that no funds were transferred and the redemption requests remain outstanding.

"This emergency action is an important step to protect investor assets and prevent further harm," said Kristina Littman, Chief of the SEC Enforcement Division's Cyber Unit. "Qin allegedly made false promises to lure investors and then continued his deception to conceal his misuse of investor funds."

The SEC's complaint, filed in the Southern District of New York on Dec. 22, 2020, charges Qin, Virgil Capital LLC and its affiliated companies 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.