The Securities and Exchange Commission (SEC) has filed charges against HyperFund and its principles alleging a $1.7 billion “Crypto Pyramid scheme.”
Founders Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) were said to have promoted HyperFund which allegedly claimed guaranteed returns for investors. The complaint alleges that HyperFund promised returns of 0.5% to 1% per day, potentially tripling ones’ initial investment in 600 days. The SEC’s complaint claims that from June 2020 to early 2022, the duo promoted a mining operation that was associated with a Fortune 500 company.
By early 2022, investors were said not to able to make any withdrawals from HyperFund
“As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This case illustrates yet again how noncompliance in the crypto space facilitates schemes where promoters capitalize on the promise of easy money, without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws.”
The SEC’s complaint charges Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws. Among other things, the complaint seeks disgorgement of any proceeds, interest and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the District of Maryland has filed criminal charges against Lee and Chunga. Chunga pleaded guilty to conspiracy to commit securities fraud and wire fraud.