Stefan He Qin, the founder of two crypto hedge funds, was sentenced to more than seven years in prison after US authorities discovered he had defrauded investors out of $ 54 million.

A September 15 statement from the US Department of Justice (DoJ) announced that US District Judge Valerie Caproni had sentenced Qin to 90 months for cheating on investors out of $ 54 million.

The 24-year-old Australian owned and operated two crypto mutual funds – Virgil Sigma and VQR, between 2017 and 2020, the latter of which was founded in February 2020.

Although Virgil Sigma claimed to be investing client assets in crypto arbitrage strategies, the DoJ found that Qin had been embezzling investor capital from the fund since 2017 to help cover personal expenses, including groceries, rent, and private investments.

To arouse suspicion among its investors, Qin drew up fake bank statements and falsified tax documents claiming the company had been profitable every month except March 2017 since August 2016.

After regularly lying to his customers about “the value, location, and condition of their investment” – with Sigma claiming $ 90 million in assets despite Qin having “spent most of the company’s capital,” Qin attempted to steal assets from VQR to pay buyback requests from Sigma investors.

In December 2020, Qin ordered VQR’s prominent trader to cut all positions in the fund and transfer the funds to Australians. Despite warnings that the move would cost VQR investors, the leading trader has sold VQR positions and transferred funds to Qin.

On February 4, 2021, Qin pleaded guilty to several securities fraud cases. In the recent DoJ announcement, US attorney Audrey Strauss said:

“Qin’s brazen and sweeping plans have cost his trusted investors more than $ 54 million, and he has now received a decent long term sentence of more than seven consecutive years in prison.”

Qin was also ordered to confiscate more than $ 54 million and sentenced to three years of supervised release.

Related: Ohio Man Pleads Guilty of $ 30M in Scam Crypto Scam Promises 15% Monthly

Regulators worldwide recently highlighted the growing prevalence of crypto fraud, with SEC chief Gary Gensler pointing out loopholes in regulatory protections that are dangerous to consumers earlier this month.

Gensler warns, “Investors may be less skeptical of opportunities that include something new or ‘advanced,’ or they may be trapped in fear of missing out (FOMO).

In May, the Federal Trade Commission reported more than $ 80 million in consumer losses due to crypto investment fraud since October 2020.