US SEC Charges Two Individuals in $1.9 Billion HyperFund Crypto Fraud Scheme
The US Securities and Exchange Commission (SEC) has filed charges against Sam Lee, an Australian blockchain entrepreneur, and Brenda Chunga, a promoter of the crypto investment scheme HyperFund. The scheme, which launched in June 2020, claimed to be dedicated to creating a decentralized finance (DeFi) ecosystem for crypto market participants.
HyperFund’s False Promises and Pyramid Scheme
HyperFund offered membership packages promising high passive returns derived from its supposed crypto mining operations. However, the SEC alleges that the scheme had no real source of revenue apart from funds received from investors and did not engage in significant crypto mining. It also operated a pyramid scheme-like referral system to reward existing members for recruiting new investors.
Criminal Indictments and Guilty Pleas
A grand jury has charged Lee and Chunga with securities and wire fraud. In addition, Rodney Burton has been accused of involvement in fake promotions for HyperFund. If convicted, Lee and Burton could face up to five years in prison. Chunga has already pled guilty to one count of conspiracy to commit securities and wire fraud.
Hot Take: Crackdown on Sophisticated Crypto Frauds Continues
The charges against the masterminds behind the $1.9 billion HyperFund crypto fraud scheme highlight the ongoing efforts by authorities to uncover and prosecute sophisticated scams in the crypto industry. The SEC’s enforcement division head emphasized that HyperFund “mined its investors’ pockets” instead of engaging in legitimate crypto mining activities. This case serves as a reminder for crypto investors to exercise caution and conduct thorough due diligence before participating in any investment schemes or projects.
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