The U.S. SEC has announced charges against the founders of the $1.7 billion HyperFund cryptocurrency scam for fraud and unregistered securities issuance.
In a press release on Monday, the SEC stated that from June 2020 to early 2022, Xue Lee and Brenda Chunga (referred to as Sam Lee and Bitcoin Beautee, respectively) raised over $1.7 billion from investors worldwide. The agency alleged that Lee and Chunga promoted HyperFund as an opportunity for profitable cryptocurrency mining investments, but, in reality, it was a pyramid scheme with no genuine source of income. The SEC added that both Lee and Chunga were aware of this situation. In 2022, the scheme collapsed, resulting in substantial losses for investors.
The SEC filed a lawsuit in the federal court in Maryland, accusing Lee and Chunga of violating federal securities laws regarding anti-fraud and registration provisions. The U.S. Attorney's Office for the District of Maryland has also brought criminal charges against Lee and Chunga.
Chunga has admitted to conspiring to commit securities fraud and wire fraud. He has also agreed to settle the charges, paying restitution and civil penalties, the specific amount of which will be determined by the court.