US DOJ Indicts Three Individuals Involved in $1.89 Billion Crypto Fraud Scheme

The US Department of Justice (DOJ) has brought charges against three people for defrauding investors of nearly $2 billion.

According to the DOJ, the individuals promoted a fraudulent cryptocurrency investment program that promised investors high returns.

A $1.89 Billion Crypto Scam

In a press release on Jan. 29, 2024, the DOJ said that Sam Lee, an Australian living in the United Arab Emirates (UAE), and American citizens Rodney Burton and Brenda Chunga, perpetrated the $1.89 billion crypto fraud with an investment scheme called HyperFund.

While Lee is said to be the co-founder of HyperFund, Burton and Chunga were promoters of the project, which also had other names such as HyperCapital, HyperNation, HyperVerse, and HyperTech.

Between June 2020 and November 2022, Lee and his promoters allegedly claimed that investors would get 0.5% to 1% daily in passive rewards if the investors bought HyperFund membership packages while promising to double or triple their initial investment.

The trio further claimed that part of the payments would come from revenue gotten from HyperFund’s “large-scale crypto mining operations.” However, according to the DOJ, such operations did not exist.

In July 2021, the company seemed not to keep up with its promises and instead reportedly started blocking investors from making withdrawals.

According to a statement by the United States Attorney Erek L. Barron for the District of Maryland:

“The level of alleged fraud here is staggering. Whether it’s cryptocurrency fraud or any other financial fraud, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”

While Lee and Chunga are charged with one count of conspiracy to commit securities fraud wire fraud, Burton is charged with operating an unlicensed money-transmitting business. Although Chunga pleaded guilty to her charges, the three individuals each face a maximum prison sentence of five years if convicted.

A Fake CEO

The United States Securities and Exchange Commission (SEC) also announced charges against Lee and Chunga. According to the SEC’s complaint , Chunga got $3.7 million from the HyperFund platform and directly from investors.

She spent her gains on luxury clothing, bags, and jewelry, bought a home in Maryland and a condominium in Dubai, as well as a BMW.

Apart from running HyperFund as what the SEC called a pyramid and Ponzi scheme, HyperFund, upon its rebranding as HyperVerse, introduced a new CEO called Steven Reece Lewis, who was a paid actor based in Bangkok, Thailand, and was a TV presenter.

The SEC accused Lee and Chunga of unregistered offers and sales of securities and fraud and is seeking disgorgement of ill-gotten funds, prejudgment interest, and civil monetary penalties.

Meanwhile, Chunga agreed to settle the charges against her, is willing to pay disgorgement and fines as determined by the court, and will be prohibited from certain activities.