Dating back to 2017, interest and hype surrounding digital assets has been off the charts. As a result, there has been no shortage of bad actors looking to take advantage of the nascent sector. This means that over the same period of time, regulators have had their hands full, as they try to hold them accountable for their actions. This past week saw multiple examples of this, with new charges being laid and others resolved.
In one of the larger cases of fraud in recent months, Stefan He Qin has plead guilty to securities fraud. The charges laid against Stefan He Qin stemmed from the theft of roughly $90 million USD.
U.S. Attorney Audrey Strauss didn’t mince words when describing the illegal actions taken by Stefan He Qin, stating,
“Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors’ money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money. Then, as he further admitted today, Qin attempted to steal money from another fund he controlled to meet redemption demands of the defrauded investors in the former fund. The whole house of cards has been revealed, and Qin now awaits sentencing for his brazen thievery.”
Now that a guilty plea has been submitted, the next step is for punitive actions to be taken.
Similar charges were first levied against Stefan He Qin in December of 2020, by the SEC.
Digital Asset Fraud
While the aforementioned case involving Stefan He Qin and his fraudulent funds is nearing completion, another trio are just beginning their own. This week, the SEC announced new charges stemming from two unregistered digital securities offerings (DSOs) against the following individuals.
- Kristijan Krstic has been charged with ‘violating the antifraud and registration provisions of the federal securities laws’
- John DeMarr has been charged with ‘violating the antifraud and registration provisions of the federal securities laws’
- Robin Enos has been charged with ‘aiding and abetting the antifraud violations’
The SEC states that the above individuals defrauded hundreds investors out of at least $11 million USD in the two unregistered DSOs. During these events, investors were fed a series of lies surrounding the intended use of generated capital. These use-cases were simply a façade to bilk investors, while the trio absconded with their money for personal use.
Upon announcing these charges, SEC Cyber Unit Chief of Enforcement, Kristina Littman, had the following to say,
“The conduct alleged in this action was a blatant attempt to victimize those interested in digital asset technology and these defendants should be held accountable…In reality, we allege, these ventures were fraudulent enterprises aimed simply at misappropriating funds from investors.”