SEC charges HyperVerse founders with crypto fraud after $2 billion Ponzi scheme

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US authorities charged leaders of the cryptocurrency investment scheme HyperVerse with defrauding investors of as much as $2 billion by touting fake crypto mining operations, even hiring an actor to pose as CEO.

The Securities and Exchange Commission lawsuit alleges HyperVerse founders Sam Lee and Brenda “Bitcoin Beutee” Chunga operated a “pyramid and Ponzi scheme” under shifting names like HyperFund and HyperTech since 2020. They stand charged criminally with conspiracy to commit wire fraud.

“HyperFund even hired an actor to pretend to be the new CEO when HyperVerse was launched,” the SEC said, referring to a Thailand-based TV presenter who spoke at the brand’s debut.

With no legitimate revenue, regulators claim investor withdrawals were paid with deposits from newer victims.

The venture’s founders and a business partner named Ryan Xu also created Blockchain Global. This project went into bankruptcy by 2021, owing creditors $58 million. Blockchain Global was the parent company of ACX, a defunct Melbourne-based crypto exchange.

Authorities said Chunga spent over $3.7 million of investor money on luxury purchases like a BMW and a million-dollar Dubai condo. At the same time, Lee transferred at least $140,000 of illicit funds to his wallet. The collapse echoes other failed crypto investment ploys.

The US District Court in Maryland indicted Lee and Chunga on Jan. 25, charging the founders with conspiracy to commit wire fraud through the crypto Ponzi scheme. Meanwhile, the SEC demanded all ill-gotten gains be returned. If approved by the court, Chunga has already agreed to a settlement, including banning future questionable deals and fines of an undisclosed amount.

“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,” states Gurbir Grewal, director of the SEC’s enforcement division.

Earlier in January, authorities also arrested Rodney Burton for allegedly defrauding from the same sham investments. The US Internal Revenue Service brought forward claims of Burton’s complicity in the fraudulent schemes of Lee and Chunga that collectively netted close to $2 billion.

The claims indicate that Burton collected substantial commissions for funneling over $7.85 million into fraudulent HyperFund accounts over 20 months ending in January 2022. After receiving a three percent referral cut, Burton is accused of fleecing unsuspecting investors who deposited dollars falsely marketed as fueling HyperTech’s cryptocurrency ventures.

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