Stephan He Chen, director of the cryptocurrency fund, has pleaded guilty to a fraud-related charge brought against him in federal court in New York, in connection with a $ 90 million fraud, according to the source.
Chen, 24, has established and managed Virgil Capital since 2016, and is supposed to handle millions of dollars in client investments.
The profits made from the investment fund he set up made him famous and a financial expert to be hosted on “CNBC”, and the famous financial newspaper “WSJ” referred to him more than once.
This popularity led many clients to pour their money into the box.
Chen claimed that he used the arbitrage strategy (arbitrage in cryptocurrency is based on spreads across different cryptocurrency platforms) to make his money.
But things turned upside down in 2019 when investors demanded their dividends.
At that time, Chen kept stalling clients’ requests before resorting to a nefarious way of fulfilling demands. He set up another fund, tried to raise more funds (based on his laurels), and then tried to pay off the early investors.
This resulted in an investigation that ultimately exposed a $ 90 million fraud.
Audrey Strauss, the US attorney representing the victims, said:
Chen drained nearly all of the assets from its $ 90 million cryptocurrency fund, stole investors’ money, and lied to investors about the fund’s performance.
Real estate and luxury life:
In a statement, the Special Agent in Charge, Peter Fitzhogg, said that “Virgil” and “VQR”, the two funds controlled by “Virgil Capital”, were used by “Chen” to finance a luxury lifestyle.
This included renting an expensive New York apartment, buying hundreds of thousands of dollars in real estate, and participating in ICO’s, most of these offers have gone almost to zero in recent years.
“Fitzhaug” added that the criminal plot continued for many years, as Chen made many misrepresentations and false promises that convinced investors to pour millions of dollars into his trading strategies.
Meanwhile, Chen is scheduled to hold a court hearing in May this year.
Chen faces up to 20 years in prison.
The witness from the story is absolute distrust and handing over your money to others to invest on your behalf, especially in the risky crypto market, which is also considered unregulated in many regions.