The authorities in the United States have busted the crypto Ponzi scheme called HyperFund that raised up to $1.89 billion from investors and brought civil and criminal charges against its Founder, Xue Lee (Sam Lee). The civil charges were brought by the Securities and Exchange Commission (SEC), and criminal charges by the federal prosecutors.
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The civil complaint also named Brenda Chunga (Bitcoin Beautee), one of the top promoters of the Ponzi scheme, while the criminal charges named Chunga and one other promoter, Rodney Burton. Chunga had pled guilty to both civil and criminal charges.
According to the court documents, Hyperfund operated between June 2020 and early 2022, selling “membership” packages to investors. It claimed “guaranteed investors high returns” from its supposed crypto asset mining operations and associations with a Fortune 500 company. However, in reality, the fund did not have any real source of revenue. It operated as a pyramid scheme, paying out old investors from the proceeds collected from the new investors. The fraudulent operation collapsed in 2022 and halted withdrawals for the investors.
While the SEC estimates the size of the fraudulent fund to be $1.7 billion, federal prosecutors estimate the figure to be $1.89 billion.
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“As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,” said Gurbir Grewal, the Director of the SEC’s Division of Enforcement.
Authorities Came in Strong
The SEC charged Lee and Chunga for violating anti-fraud and registration provisions and is seeking to recover the investors’ proceeds, along with monetary penalties yet to be determined. Meanwhile, the federal prosecutors charged Lee and Chunga with one count of conspiracy to commit securities and wire fraud. Burton is facing one count of conspiracy to operate an unlicensed money-transmitting business and one count of operating an unlicensed money-transmitting business. Each count of these criminal charges carries a maximum penalty of five years.
Although Chunga pled guilty, her monetary penalty in the civil lawsuit and prison time for the criminal charges are yet to be determined.
“The level of alleged fraud here is staggering,” said U.S. Attorney Erek Barron for the District of Maryland. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”
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The authorities in the United States have busted the crypto Ponzi scheme called HyperFund that raised up to $1.89 billion from investors and brought civil and criminal charges against its Founder, Xue Lee (Sam Lee). The civil charges were brought by the Securities and Exchange Commission (SEC), and criminal charges by the federal prosecutors.
The civil complaint also named Brenda Chunga (Bitcoin Beautee), one of the top promoters of the Ponzi scheme, while the criminal charges named Chunga and one other promoter, Rodney Burton. Chunga had pled guilty to both civil and criminal charges.
etoro: Experience a reliable, user-friendly platform trusted by millions. Stay ahead in the crypto world. Board the Crypto Train now!
According to the court documents, Hyperfund operated between June 2020 and early 2022, selling “membership” packages to investors. It claimed “guaranteed investors high returns” from its supposed crypto asset mining operations and associations with a Fortune 500 company. However, in reality, the fund did not have any real source of revenue. It operated as a pyramid scheme, paying out old investors from the proceeds collected from the new investors. The fraudulent operation collapsed in 2022 and halted withdrawals for the investors.
While the SEC estimates the size of the fraudulent fund to be $1.7 billion, federal prosecutors estimate the figure to be $1.89 billion.
Keep Reading
“As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,” said Gurbir Grewal, the Director of the SEC’s Division of Enforcement.
Authorities Came in Strong
The SEC charged Lee and Chunga for violating anti-fraud and registration provisions and is seeking to recover the investors’ proceeds, along with monetary penalties yet to be determined. Meanwhile, the federal prosecutors charged Lee and Chunga with one count of conspiracy to commit securities and wire fraud. Burton is facing one count of conspiracy to operate an unlicensed money-transmitting business and one count of operating an unlicensed money-transmitting business. Each count of these criminal charges carries a maximum penalty of five years.
Although Chunga pled guilty, her monetary penalty in the civil lawsuit and prison time for the criminal charges are yet to be determined.
“The level of alleged fraud here is staggering,” said U.S. Attorney Erek Barron for the District of Maryland. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”
Participate in Our Fraud Survey: Your Opinion Matters!
We invite you to participate in our joint survey conducted
by FXStreet and Finance Magnates Group, which explores prevalent online
financial fraud types, platforms used for fraudulent activities, effectiveness
of countermeasures, and challenges faced by companies in tackling such fraud. Your
valuable insights will help inform future strategies and resource allocation in
combating financial fraud.
Social Media Scams: Help Shape the Fight with Your 2024 Survey Participation
