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On Monday, the US Department of Justice pressed criminal charges against three defendants for orchestrating HyperFund, a global $1.9 billion crypto fraud scheme, CNBC reported.
In a related action, the US Securities and Exchange Commission (SEC) charged two of the defendants for their roles in the alleged pyramid scheme, which collapsed in 2022.
Imaginary crypto mining operations
According to the DOJ, the three defendants lied to investors in HyperFund that they stood to gain “substantial returns” from cryptocurrency, which was not actually being mined.
The defendants are Sam Lee aka Xue Lee, Rodney Burton, and Brenda Chunga. Sam Lee is an Australian citizen who lives in Dubai. He is the co-founder of HyperFund. Rodney Burton of Miami aka Bitcoin Rodney and Brenda Chunga of Maryland promoted the scheme.
The charges
Lee is charged with one count of wire fraud and conspiring to commit securities fraud. Burton is charged with operating and conspiring to operate an unlicensed money-transmitting business.
Despite the level of alleged fraud that US Attorney for Maryland Erek Barron calls “staggering”, the three only face up to five years in prison.
Chunga pled guilty to conspiracy to commit securities fraud and wire fraud. In addition, she agreed to settle the lawsuit with the SEC by disgorging her profits from the scheme. She will also pay civil fines to be determined later.
According to the SEC, she received over $3.7 million from investors and the HyperFund platform and used the money to pay for “extravagant personal expenses.” The SEC also charged Lee with the same violations.
Allegedly, the three sold online investment contracts through HyperFund, which was also known as HyperVerse and HyperCapital, from June 2020 to November 2022. They claimed investors could earn up to 1% a day until crypto mining operations ultimately doubled or tripled their original investments. The platform blocked withdrawals by clients in July 2021.
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