The DOJ Charges Three Individuals for $1.89 Billion Crypto Scam
The US Department of Justice (DOJ) has filed charges against three individuals for defrauding investors of almost $2 billion. The DOJ alleges that these individuals promoted a fraudulent cryptocurrency investment program that promised high returns to investors.
Details of the Scam
In a press release on Jan. 29, 2024, the DOJ revealed that Sam Lee, an Australian residing in the UAE, along with American citizens Rodney Burton and Brenda Chunga, orchestrated the $1.89 billion crypto scam through an investment scheme known as HyperFund. Lee is said to be the co-founder of HyperFund, while Burton and Chunga were promoters of the project, which operated under various names such as HyperCapital, HyperNation, HyperVerse, and HyperTech.
Between June 2020 and November 2022, Lee and his associates allegedly promised investors daily passive rewards of 0.5% to 1% if they purchased HyperFund membership packages. They also claimed that they would double or triple the initial investment. Additionally, they stated that revenue from HyperFund’s crypto mining operations would contribute to these payments. However, according to the DOJ, there were no such operations.
Failure to Meet Promises
In July 2021, HyperFund reportedly began blocking investors from making withdrawals, failing to fulfill their promises. United States Attorney Erek L. Barron for the District of Maryland commented on the case stating that “The level of alleged fraud here is staggering.” He emphasized that people should be wary of financial fraud schemes that sound too good to be true.
Legal Charges and Maximum Sentences
Lee and Chunga are charged with one count of conspiracy to commit securities fraud wire fraud, while Burton is charged with operating an unlicensed money-transmitting business. Chunga has pleaded guilty to her charges. If convicted, each individual faces a maximum prison sentence of five years.
The SEC’s Charges and Allegations
The United States Securities and Exchange Commission (SEC) has also filed charges against Lee and Chunga. According to the SEC’s complaint, Chunga received $3.7 million from the HyperFund platform and directly from investors. She used the funds for luxury purchases such as clothing, bags, jewelry, a home in Maryland, a condominium in Dubai, and a BMW.
HyperFund, which rebranded as HyperVerse, introduced a new CEO named Steven Reece Lewis. However, the SEC revealed that Lewis was a paid actor based in Bangkok and a TV presenter. The SEC accuses Lee and Chunga of unregistered offers and sales of securities as well as fraud. They are seeking disgorgement of ill-gotten funds, prejudgment interest, and civil monetary penalties.
Chunga has agreed to settle the charges against her by paying disgorgement and fines determined by the court. She will also be restricted from certain activities.
Hot Take: Massive Crypto Scam Exposes Need for Investor Caution
The recent $1.89 billion crypto scam perpetrated by individuals associated with HyperFund serves as a stark reminder that investors must exercise caution in the cryptocurrency space. Promises of high returns and guaranteed profits should be approached with skepticism. The case highlights the importance of conducting thorough due diligence before investing in any cryptocurrency project or investment scheme.
It is crucial to verify the legitimacy of companies, their operations, and their claims before committing any funds. Investors should also be aware of red flags such as unrealistic promises and unregistered offerings. By staying vigilant and informed, you can protect yourself from falling victim to fraudulent schemes and help maintain the integrity of the crypto industry.
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