Following their legal tussle with Ripple Labs – the second one this year for Ripple, after their debacle with the NPPA – the SEC has also moved against Virgil Capital LLC, a crypto investment firm.
The US Securities and Exchange Commission have put in place an order freezing assets and emergency relief funds for Virgil Capital LLC and all affiliates of the company, citing possible securities fraud.
Virgil Capital’s cryptocurrency trading fund – Virgil Sigma Fund LP – is being investigated in relation to fabricated records. The record states that up to $3.5 million in investments were not redeemed and $1.7 million in investor funds were due to be cashed in, in an attempt to pay off loans.
Although the funds were meant for crypto trading using a proprietary algorithm, it appears at least some of them were used for risky undisclosed investments and other purposes.
Stefan Quin – the 23-year old founder of Virgil Capital – reportedly told investors ever since July that their assets had been transferred to another fund, known as the VQR Multistrategy Fund LP.
However, it appears the transfers never actually took place.
According to Kristina Littman, the head of the SEC Enforcement Division’s Cyber Unit, the freeze is a preliminary step taken to ensure no more damage can be done to investor assets until the bigger picture is revealed.
“This emergency action is an important step to protect investor assets and prevent further harm. Stefan Qin allegedly made false promises to lure investors and then continued his deception to conceal his misuse of investor funds.”
The SEC’s ongoing investigation will be led by Fitzann Reid of the San Francisco Regional Office and Amanda Straub of the Enforcement Division’s Cyber Unit.
On the litigation side, work will be carried out by Susan LaMarca, Ms. Straub, and Ms. Reid, under the direct supervision of Steven Buchholz and Ms. Littman of the Cyber Unit.
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