Wall Street Crackdown! Federal Government Flexes in Wake of GameStop Short Squeeze

On Thursday, in separate cases, regulators and prosecutors touted new charges in a “Ponzi-like scheme” and a major conviction for fraud at a cryptocurrency hedge fund.

The SEC unveiled new charges against GBP Capital, a New York-based alternative asset management firm. In a press release, they alleged the firm was “running a Ponzi-like scheme that raised over $1.7 billion.”

The SEC went on to say that the firm “lied to investors” and “the fraudulent scheme continued for more than four years.”

According to reports in the Tampa Bay Times, three executives from GBP Capital were arrested and charged with wire fraud, securities fraud, and conspiracy.

In an unrelated case, prosecutors from the U.S. Attorney’s office for the Southern District of New York secured a guilty plea for “securities fraud” from a former hedge fund manager for “stealing investors’ money.”

Stefan He Qin, a 24-year-old Australian national, pled guilty to one count of securities fraud. The charge carries a sentence of up to 20 years in prison. 

Qin ran two cryptocurrency hedge funds in New York from 2017 to 2020. 

U.S. Attorney Audrey Strauss said Qin “drained almost all of the assets from the $90 million cryptocurrency fund.” Then “attempted to steal money from another fund he controlled to meet redemption demands of the defrauded investors”

Qin’s sentencing is scheduled for later this year.

The two cases appear to show that regulators are not asleep at the wheel — but rather that investigations and prosecutions take time to play out.

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