The Securities and Exchange Commission accused Stefan Qin, a hedge fund manager, of creating a fraudulent investment company. SEC shared a press release via its website concerning the allegations filed against the Australian man. Crime in the crypto space is ever-rising in different ways.

People take advantage of the lack of transparency in some crypto-related investments to enrich themselves with fundings from unsuspecting investors. Sources claim that the regulatory body alleged that Virgil Capital, Qin’s investment firm, spearheaded some investment frauds from 2018 till 2020. The press release, which is dated December 28, explained actions the body took to curb the alleged fraud.

SEC obtains emergency assets freeze

The body took immediate action with its emergency assets freeze order request. The body requested the order to freeze Virgil Capital and its accomplice’s accounts related to the accusations. SEC also took emergency relief to allow immediate actions to take place without wasting time on bureaucracy.

The US regulatory body explained that Virgil Capital’s fraudulent investments were spearheaded by the investment company’s founder, Stefan Qin. The man also controls other companies affiliated with the fund, which the regulatory body suspects are part of the fraud.

The Securities and Exchange regulatory body reported that Virgil Capital intentionally deceived its clients into defrauding them of their investments in the fund. The entities involved in the Sigma Fund, according to SEC, clearly gave false statistics and misrepresented claims. Also, in SEC’s post, it claimed the firm deceived its investors into thinking their money was strictly going into crypto-related businesses, but this might not be so since the regulatory body said the company used their funds interests and high-risk investments, not in the written agreements. If investigated and found so, the company risks heavy sanctions for multiple crypto-related crimes committed.

Investors redemption requests denied

The company’s refusal to grant the redemption requests of its investors further increased suspension. Investors who requested were told their dividends were in another fund with different management and operation. Expectant investors explained that The fund did not execute the request, and Virgil did not give their interests.

SEC explained that the freezing of the accounts would protect the interest of investors of the firm. It also opined that the deception was to make investors stayed interested in the business and hide the criminal acts going on underneath. The body seeks remedies for the victims of the alleged fraud and civil penalties.

The firm’s investigation is still ongoing, but with SEC’s assertion and several witnesses, Virgil might risk several lawsuits from private and state-owned bodies. SEC assures transparency and Fairplay in the investment company, and it prioritizes investors who have slower bargaining power when some issues arrive.

The US regulatory body recently sued Ripple in a high-profile case. The crypto space is afraid that if SEC eventually wins the case, it could disrupt some crypto-related activities and put investors in irrecoverable losses. The body wins most of its claims, which further worries investors of the American fintech firm.