SEC sues HyperFund founders for $1.7B crypto ‘Ponzi’ scheme

• HyperFund founders Lee and Chunga sued for $1.7B crypto rip-off.
• Chunga has agreed to a settlement, pending court docket approval, whereas Lee faces authorized motion.
• Further prices have been filed by the US Lawyer’s Workplace.

The US Securities and Change Fee (SEC) has taken decisive authorized motion in opposition to people allegedly concerned in a cryptocurrency ‘Ponzi’ scheme price $1.7 billion, related to HyperFund, HyperVerse, and HyperTech.

The accused people are Xue Lee, also referred to as Sam Lee, and Brenda Chunga, also referred to as Bitcoin Beautee. They’re accused of orchestrating fraudulent schemes that deceived buyers and violated federal securities legal guidelines.

False membership plans

The lawsuit filed by the SEC on January 29, 2024, alleges that Sam Lee and Brenda Chunga engaged in misleading practices by promoting false “membership” plans to buyers, promising profitable returns that by no means materialized. They purportedly misled buyers with unfounded claims of considerable income from HyperFund’s cryptocurrency mining operations and falsely represented an affiliation with a Fortune 500 firm.

Brenda Chunga is accused of personally acquiring $3.7 million from the rip-off, which she reportedly used to buy a $1.1 million condominium in Dubai, a $1.2 million home in Maryland, and a BMW. However, Xue Lee is accused of allegedly getting round $140,000 in cryptocurrencies that had been deposited right into a crypto pockets below his custody.

Chunga, who presently resides in Maryland, has entered right into a settlement with the SEC, agreeing to chorus from future violations of securities legal guidelines and consenting to pay fines, pending court docket approval. Nevertheless, the SEC is pursuing authorized motion in opposition to Xue Lee, who presently resides within the United Arab Emirates, for fraud and registration legislation violations, searching for to halt his involvement in related fraudulent actions, get well illicitly obtained funds, and impose further penalties.

Along with the SEC lawsuit, the US Lawyer’s Workplace in Maryland has filed prices in opposition to Lee and Chunga for wire and securities fraud. Chunga has reportedly admitted to her function within the scheme. 

Additional investigations have revealed Lee’s affiliation with HyperVerse, one other suspected rip-off focusing on people in Asia, Africa, and the Pacific. The SEC speculates that Lee could have connections to different cryptocurrency scams, underscoring the persistent challenges of fraudulent actions inside the cryptocurrency trade.

Xue Lee, who’s an Australian nationwide, can also be below investigation by the Australian Securities Funding Fee for his connection to the collapsed Blockchain World, which owed $58 million to collectors on the time of its collapse in 2021. The Australian regulator is contemplating prices in opposition to Lee and his enterprise companions, Allan Guo and Ryan Xu, for potential breaches of the Australian Companies Act.