- The founder of fake crypto trading firm Virgil Capital has been sentenced to 7.5 years in prison
- Qin pleaded guilty in February for pretending Virgil Capital was wildly successful when in fact it was a Ponzi scheme
- Qin must also forfeit $54 million
The founder of Virgil Capital (also known as Virgil Sigma), which purported to be a wildly successful cryptocurrency trading firm but was instead a Ponzi scheme, has been sentenced to 90 months in prison. Stefan Qin founded Virgil Capital in 2016 and posted just one unsuccessful month in over three years before the $90 million scam was unveiled. Qin pleaded guilty in February and, prior to sentencing, apologized for his actions, which may have helped his cause in getting a relatively light sentence.
Virgil Capital Rode Crypto Wave
Qin started Virgil Capital in 2016 when aged 19, labeling himself a math prodigy and dropping out of college to do so. Qin claimed to have traded his way to a 500% gain in less than a year using a self-built arbitrage algorithm, making headlines due to his return and his age, although most of the gains were down to the cryptocurrency space being in a bull market at the time.
Virgil Capital and Qin received a profile in the Wall Street Journal in February 2018 which gave the fund an unexpected boost and brought the total capital entering the fund to $90 million. This allowed Qin to live a lavish lifestyle, including a $23,000-a-month apartment in lower Manhattan with a pool, sauna, steam room, and golf simulator. Despite the crypto bear market kicking in he was still able to post positive gains.
Ponzi Scheme Revealed
In truth however, Virgil Capital had turned into a giant Ponzi scheme, with the influx of capital being used to pay out withdrawals. Qin even resorted to draining a supplementary fund of $3.5 million to facilitate them, effectively stealing from his own clients.
Qin pleaded guilty in February and could have received a maximum of 14 years in prison but ended up receiving around half that, plus an order to forfeit $54,793,532.
