SEC sues HyperFund founders for $1.7B crypto 'Ponzi' scheme

Cryptocurrency

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

Published

1 year ago

January 30, 2024

Dripp

HyperFund founders Lee and Chunga sued for $1.7B crypto scam.
Chunga has agreed to a settlement, pending court approval, while Lee faces legal action.
Additional charges have been filed by the US Attorney’s Office.

The US Securities and Exchange Commission (SEC) has taken decisive legal action against individuals allegedly involved in a cryptocurrency ‘Ponzi’ scheme worth $1.7 billion, associated with HyperFund, HyperVerse, and HyperTech.

The accused individuals are Xue Lee, also known as Sam Lee, and Brenda Chunga, also known as Bitcoin Beautee. They are accused of orchestrating fraudulent schemes that deceived investors and violated federal securities laws.

False membership plans

The lawsuit filed by the SEC on January 29, 2024, alleges that Sam Lee and Brenda Chunga engaged in deceptive practices by selling false “membership” plans to investors, promising lucrative returns that never materialized. They purportedly misled investors with unfounded claims of substantial profits from HyperFund’s cryptocurrency mining operations and falsely represented an affiliation with a Fortune 500 company.

Brenda Chunga is accused of personally obtaining $3.7 million from the scam, which she reportedly used to purchase a $1.1 million condominium in Dubai, a $1.2 million house in Maryland, and a BMW. On the other hand, Xue Lee is accused of allegedly getting around $140,000 in cryptocurrencies that were deposited into a crypto wallet under his custody.

Chunga, who currently resides in Maryland, has entered into a settlement with the SEC, agreeing to refrain from future violations of securities laws and consenting to pay fines, pending court approval. However, the SEC is pursuing legal action against Xue Lee, who currently resides in the United Arab Emirates, for fraud and registration law violations, seeking to halt his involvement in similar fraudulent activities, recover illicitly obtained funds, and impose additional penalties.

In addition to the SEC lawsuit, the US Attorney’s Office in Maryland has filed charges against Lee and Chunga for wire and securities fraud. Chunga has reportedly admitted to her role in the scheme.

Further investigations have revealed Lee’s association with HyperVerse, another suspected scam targeting individuals in Asia, Africa, and the Pacific. The SEC speculates that Lee may have connections to other cryptocurrency scams, underscoring the persistent challenges of fraudulent activities within the cryptocurrency industry.

Xue Lee, who is an Australian national, is also under investigation by the Australian Securities Investment Commission for his connection to the collapsed Blockchain Global, which owed $58 million to creditors at the time of its collapse in 2021. The Australian regulator is considering charges against Lee and his business partners, Allan Guo and Ryan Xu, for potential breaches of the Australian Corporations Act.