DOJ Charges Founder and Top Promoters of Alleged $1.89 Billion Crypto Ponzi Scheme That Promised High Returns
The U.S. Department of Justice (DOJ) has filed criminal charges against three individuals for their alleged involvement in a cryptocurrency pyramid scheme that scammed victims out of $1.89 billion.
One of the accused is Sam Lee, an Australian national who purportedly co-founded an online investment platform called “HyperFund.” The platform falsely claimed that investors who bought “memberships” would receive daily passive rewards ranging from 0.5% to 1%, with their initial investment doubling or tripling.
According to the DOJ, HyperFund fraudulently stated that these rewards came from profits generated by large-scale cryptocurrency mining. However, it is alleged that the mining operation did not exist, and the platform started freezing customer withdrawals in July 2021.
Criminal Charges and Penalties
Sam Lee faces charges of conspiracy to commit securities fraud and wire fraud, which carry a maximum prison sentence of five years.
Rodney Burton, a resident of Miami, has been charged with one count of conspiracy to operate an unlicensed money-transmitting business and one count of operating such a business. Burton allegedly promoted HyperFund.
Brenda Chunga, a Maryland resident and another promoter of HyperFund, has pleaded guilty to conspiracy to commit securities fraud and wire fraud. She could face up to five years in prison and has agreed to pay at least $3 million in restitution to the victims.
SEC Charges
In addition to the DOJ charges, both Sam Lee and Brenda Chunga have also been charged by the U.S. Securities and Exchange Commission (SEC) for violating anti-fraud and registration provisions of federal securities laws.
Hot Take: A Major Blow to Crypto Scammers
The DOJ’s charges against the founder and top promoters of the alleged $1.89 billion crypto Ponzi scheme demonstrate a significant crackdown on fraudulent activities in the cryptocurrency industry. This enforcement action serves as a warning to scammers that they will face severe consequences for deceiving investors and misusing digital assets. It also highlights the importance of conducting thorough due diligence before investing in any crypto project, as scams and fraudulent schemes continue to be a major concern within the industry.
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