In the United States, authorities have successfully dismantled the massive crypto Ponzi scheme known as HyperFund, which had swindled investors out of a staggering $1.89 billion.
The founder of HyperFund, Xue Lee (also known as Sam Lee), is now facing both civil and criminal charges in connection with this fraudulent operation.
The Securities and Exchange Commission (SEC) has filed civil charges against Lee, while federal prosecutors have brought criminal charges against him.
Additionally, Brenda Chunga, widely recognized as “Bitcoin Beautee” and a prominent promoter of the Ponzi scheme, has also been named in the civil complaint, and both criminal charges and civil charges have been levied against her. Chunga has already pleaded guilty to these charges.
HyperFund had been operating from June 2020 until early 2022, luring in unsuspecting investors with the promise of “guaranteed high returns.”
They purportedly achieved these returns through cryptocurrency asset mining and their association with a Fortune 500 company.
However, it soon became apparent that these claims were nothing but a facade. In reality, HyperFund had no legitimate source of revenue and functioned as a pyramid scheme, using funds from new investors to pay off earlier ones.
The scheme ultimately collapsed in 2022, leaving investors unable to withdraw their investments.
The SEC estimates the fraudulent fund to be approximately $1.7 billion, while federal prosecutors put the figure slightly higher at $1.89 billion.
Gurbir Grewal, the Director of the SEC’s Division of Enforcement, commented, “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.”
The SEC’s charges against Lee and Chunga include violations of anti-fraud and registration provisions, with the intention of recovering investors’ funds and determining monetary penalties.
Simultaneously, federal prosecutors have charged them with conspiracy to commit securities and wire fraud.
Rodney Burton, another promoter of the scheme, faces charges related to operating an unlicensed money-transmitting business.
Each count of the criminal charges carries a maximum penalty of five years.
While Chunga has admitted guilt, the precise monetary penalties for the civil lawsuit and the prison sentence for the criminal charges remain pending.
U.S. Attorney Erek Barron for the District of Maryland emphasized, “The level of alleged fraud here is staggering.
Whether it’s cryptocurrency fraud or any other financial fraud, 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.”