A Canberran "maths whiz" is facing up to 20 years in a United States prison after he admitted swindling his way to a New York penthouse by ripping off cryptocurrency investors to the tune of almost US$90 million (A$114 million).
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Stefan He Qin, 24, spent years orchestrating what has been described as "a reprehensible criminal scheme" in order to fund his "extravagant lifestyle".
But his house of cards ultimately came crashing down, and the Radford College graduate pleaded guilty to a securities fraud charge when he fronted the US District Court in Manhattan earlier this month.
In a statement following the plea, the US Department of Justice said Qin committed the crime while in charge of two cryptocurrency investment funds he set up in the Big Apple.
In 2017, Qin began stealing assets from the first of the funds, Virgil Sigma, and defrauding its investors by failing to invest capital as advertised.
Instead, he used the money for "personal expenses" like food, real estate investments and rent for a penthouse apartment in Manhattan.
Qin also used "a substantial portion of investor capital" to make personal investments in entities that had nothing to do with cryptocurrencies, and in "crypto-assets" that were not in line with the fund's stated strategy.
"As a result of these and other fraudulent activities, Qin dissipated nearly all of the investor capital in Virgil Sigma," the justice department said.
"In the course of stealing assets from Virgil Sigma, Qin regularly lied to the fund's investors about the value, location, and status of their investment capital."
The 24-year-old's deception created a public perception of success and enabled him to run what was effectively a Ponzi scheme, where existing investors are paid with money collected from new backers to cover the fact there are little or no legitimate profits.
The scheme gathered momentum when the Wall Street Journal detailed Virgil Sigma's purported accomplishments in 2018 and described Qin as a cryptocurrency "wunderkind", prompting substantial growth as new investors "flocked" to the fund.
Qin's web of deceit finally unravelled last year, as he struggled to meet redemption requests from Virgil Sigma investors after squandering too much of their money.
In order to access the funds he needed to fulfill the requests and conceal his fraudulent activities, he attempted to steal from VQR, another cryptocurrency fund he had set up earlier in the year.
But authorities were onto Qin and he was charged in December 2020.
He ultimately pleaded guilty to the securities fraud charge in early February.
Audrey Strauss, the US Attorney for the southern district of New York, described Qin's crime in a statement as "brazen thievery".
"Stefan He Qin drained almost all of the assets from the [US]$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," she said.
"Then, as he further admitted [in court], 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."
US Homeland Security Investigations special agent-in-charge Peter Fitzhugh said the offender's two multimillion-dollar funds had been revealed to be "slush funds for Qin to live his extravagant lifestyle".
"Qin orchestrated this reprehensible criminal scheme for many years, making misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency firms, all the while stealing the hard-earned money of his investors," he said.
"Furthermore, Qin mastered the art of trickery by representing these firms as profitable investment strategies so more victims fell to his tactics and were defrauded of nearly [US]$100 million."
Qin is set to be sentenced in May, with the charge he has pleaded guilty to carrying a maximum penalty of two decades behind bars.
His potential new home in a US federal prison cell represents a dramatic fall from grace for the former Canberra resident, who graduated from Radford College, in Bruce, in 2014.
The independent school once celebrated Qin as a successful "maths whiz", but with the 24-year-old's reputation in tatters, he has since vanished from its website.
