The SEC has issued emergency action against Virgil Capital LLC, all of its affiliate companies, and fund director Stefan Qin, to freeze the company’s assets in connection with potential securities fraud.

The Securities and Exchange Commission (SEC) has been cracking down on the cryptocurrency space as the asset class continues to grow and break all-time highs across a variety of metrics.

Last week’s bombshell came after the SEC charged Ripple Labs and two of its executives with the sale of $1.3 billion in unregistered securities. This resulted in an over 50 percent decrease in XRP’s market cap. The SEC has now gone after an allegedly fraudulent cryptocurrency fund manager.

According to the official press release:

“Qin and his entities have been defrauding investors in the Sigma Fund since at least 2018 by making material misrepresentations about the fund’s strategy, assets, and financial condition.  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.”

The complaint continues, stating that investors who requested redemptions from the initial Sigma Fund (Virgil Capital’s cryptocurrency trading fund) had their interest transferred to a different fund controlled by Qin.

This fund was supposed to have separate management and operations from the Sigma Fund. The SEC alleges that Qin never transferred any of the funds, and in addition, Qin has been misappropriating the funds to raise new investments in his cryptocurrency based Sigma Fund.

Kristina Littman, the Chief of the SEC Enforcement Division’s Cyber Unit, continued:

“This emergency action is an important step to protect investor assets and prevent further harm, Qin allegedly made false promises to lure investors and then continued his deception to conceal his misuse of investor funds.”

The SEC has not held back from going after crypto projects and fund managers in the past. But will the US-based watchdog spark a new wave of increased global regulatory oversight?

As bitcoin prices eclipse all-time highs, authorities are likely looking into how they too can benefit from this asset class, not only to protect investors lured in by decentralized blockchain technology.

As the cryptocurrency space matures, users should expect increased oversight from governmental bodies further afield.

The post SEC Charges Crypto Fund Manager With Fraud and Freezes Assets appeared first on BeInCrypto.

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