SEC charges HyperFund founder with $1.7 billion fraud
The U.S. Securities and Exchange Commission (SEC) today charged Xue Lee, known as Sam Lee, and Brenda Chunga, known as Bitcoin Beautee, with fraudulent cryptoasset pyramid scheme at HyperFund. The company raised more than $1.7 billion from investors around the world.
According to the SEC, from June 2020 to early 2022, Lee and Chunga promoted HyperFund “membership” packages. These packages, they claimed, guaranteed investors high returns. Including HyperFund's alleged cryptoasset mining operations and partnerships with a Fortune 500 company.
However, the lawsuit alleges that Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of income other than funds received from investors. In 2022, HyperFund collapsed and investors were no longer able to make withdrawals.
In its complaint, the SEC alleges that Lee and Chunga lured investors with the lure of mining profits with crypto assets. "But the only thing HyperFund drained was the pockets of its investors," according to Gurbir S. Grewal, director of the SEC's Division of Enforcement.
The regulator indicates that this case once again illustrates how non-compliance in the crypto space facilitates schemes in which promoters capitalize on the promise of easy money, without providing details of investor protections required by the registration provisions of the federal crypto laws. values.
The SEC's complaint, filed in federal district court for the District of Maryland, accuses Lee and Chunga of violating the anti-fraud and registration provisions of the federal securities laws.
The lawsuit seeks permanent injunctive relief, conduct-based injunctions preventing the defendants from engaging in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
