The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have unveiled charges against individuals involved in the sprawling $1.9 billion HyperFund cryptocurrency Ponzi scheme, shedding light on one of the largest crypto frauds to date.
On Monday, the DOJ announced criminal charges against Sam Lee, Rodney Burton, and Brenda Chunga for their roles in orchestrating the fraudulent scheme, which promised substantial returns from non-existent cryptocurrency mining operations. Lee, an Australian citizen residing in Dubai, is accused of co-founding HyperFund, while Burton and Chunga served as promoters.
Lee faces charges of conspiracy to commit securities fraud and wire fraud, while Burton is charged with conspiracy to operate an unlicensed money-transmitting business. Chunga, also known as Bitcoin Beautee, pled guilty to conspiracy charges and agreed to settle civil charges brought by the SEC, which included disgorgement of illicit gains and payment of civil fines.
The SEC’s complaint outlined Chunga’s receipt of over $3.7 million from the HyperFund platform and investors, using the funds for personal expenses and recruitment efforts. Lee faces similar SEC charges.
HyperFund, operating under various aliases like HyperTech and HyperCapital, allegedly duped investors with promises of daily returns ranging from 0.5% to 1%, purportedly generated through crypto mining revenue. However, the scheme collapsed in 2022, with investors unable to withdraw funds since July 2021.
Erek Barron, U.S. Attorney for Maryland, described the scale of the fraud as staggering, reflecting the severity of the charges brought forth by both the DOJ and the SEC. If convicted, Lee and Burton could face up to five years in prison, highlighting the gravity of their alleged offenses.
The unfolding case underscores regulatory scrutiny in the crypto space and serves as a cautionary tale for investors, emphasizing the importance of due diligence and vigilance in navigating the cryptocurrency landscape.
