DOJ and SEC Unveil Charges in $1.9 Billion HyperFund Cryptocurrency Fraud
The Department of Justice announced criminal charges against two people and the guilty plea of a third person for orchestrating a $1.9 billion cryptocurrency fraud scheme known as HyperFund.
Criminal Charges in HyperFund Cryptocurrency Fraud
The Department of Justice has revealed criminal charges against two individuals and a guilty plea from a third person for their involvement in a $1.9 billion cryptocurrency fraud known as HyperFund. The Securities and Exchange Commission has also charged two individuals in a related civil action.
HyperFund, also known as HyperTech, HyperCapital, HyperVerse, and HyperNation, was a worldwide cryptocurrency Ponzi fraud scheme that collapsed in 2022. The DOJ alleges that the defendants falsely promised investors substantial returns from cryptocurrency mining operations that didn't actually exist.
Charged in the criminal case were Sam Lee, an Australian citizen living in Dubai who is accused of co-founding HyperFund, and two HyperFund promoters, Rodney Burton of Miami and Brenda Chunga of Severna Park, Maryland. Lee is charged with conspiracy to commit securities fraud and wire fraud, while Burton is charged with conspiracy to operate an unlicensed money-transmitting business. Chunga pled guilty to conspiracy to commit securities fraud and wire fraud.
Maximum Possible Sentences
Sam Lee and Rodney Burton face a maximum possible sentence of five years in prison if convicted of their charges. Brenda Chunga, who pled guilty, also faces the same possible maximum sentence.
In addition to the criminal charges, Brenda Chunga has agreed to settle civil charges brought by the SEC. As part of the settlement, she will disgorge money she made in the scheme and pay civil fines.
The SEC complaint alleges that Brenda Chunga received over $3.7 million from both the HyperFund platform and investors, which she used to fund personal expenses and recruit new participants into the scheme.
Collapse of HyperFund Scheme
The DOJ alleges that from June 2020 to November 2022, Sam Lee and his co-conspirators sold investment contracts through HyperFund's platform, promising daily returns of 0.5% to 1% through revenue from crypto mining. However, in July 2021, the scheme began blocking investor withdrawals.
The level of fraud alleged in the HyperFund cryptocurrency fraud case is described as staggering by the U.S. Attorney for Maryland, Erek Barron. Both the DOJ and SEC are bringing charges against the individuals involved in the scheme, seeking justice and restitution for the victims.
