SEC Charges Masterminds of $1.7 Billion HyperFund Crypto Scheme

Jimmy Aki
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The U.S. Securities and Exchange Commission (SEC) has brought charges against Xue Lee and Brenda Chunga, the alleged masterminds of the deceptive $1,7 billion Hyperfund crypto scheme.

HyperFund was a Mere Ponzi Scheme

In a January 29 press release, the SEC accused Lee and Chunga of promoting HyperFund membership packages.

With the package, defendants lured investors by promising substantial returns from the project’s crypto-mining operations and affiliations with a Fortune 500 company.

Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, stated that HyperFund’s goal was to deplete investors’ pockets.

Grewal highlighted the broader issue of noncompliance within the crypto space, allowing promoters to capitalize on the allure of easy money. He said this occurs without providing the essential investor protection disclosures mandated by federal securities laws.

As a result, defendants face charges in the Maryland federal court, including violations of anti-fraud and registration provisions.

The SEC’s complaint seeks significant remedies, including permanent injunctive relief, conduct-based injunctions, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

In a decisive move, Chunga has pleaded guilty, settling with a permanent injunction and commitments to pay disgorgement and civil penalties, pending court approval.

In contrast, charges against Lee will proceed through litigation. This is part of a broader regulatory crackdown on fraudulent activities in the crypto space to safeguard investors and maintain market transparency.

Bitcoin Rodney’s Role in HyperFund Scheme

Before the recent charges against Lee and Chunga, U.S. authorities had already arrested Rodney Burton, also known as Bitcoin Rodney.

According to court documents from the US Internal Revenue Service (IRS), Burton is accused of participating in promotional presentations for HyperFund.

Burton received over $7.8 million from investors between June 2020 and January 2022.

HyperFund, operating under various names like HyperTech, HyperCapital, and HyperVerse, allegedly claimed revenue from non-existent bitcoin mining. The scheme attracted investors with promises of daily 0.5%-1% rewards, pledging to double or triple their investments.

Moreover, payouts were often funded by contributions from newer investors, resembling a classic Ponzi scheme.

In mid-2021, the scheme collapsed, blocking withdrawals and leaving investors with worthless “Hyper Units.”

HyperUnits are associated with different crypto tokens. When matured, they become eligible for withdrawal and conversion into other cryptocurrencies.

Despite global warnings from authorities, Australian regulators initially overlooked the red flags.

However, in a joint legal action, Lee, Chunga, and Burton faced charges in the District of Maryland federal district court on January 29, 2024. This highlights the increased efforts to combat fraudulent schemes in the crypto space.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.