Is the DoJ’s Charging of Three Individuals for a $1.89 Billion Crypto Fraud Scheme the Biggest Catch to Date?
The Office of Public Affairs issued a press release yesterday announcing that the Justice Department has charged two individuals and obtained a guilty plea from a third individual in connection with a cryptocurrency fraud scheme called HyperFund, which amounted to $1.89 billion.
The three defendants are accused of defrauding investors by making false promises and luring them into the scheme. Court documents reveal that they misrepresented their intentions and enticed investors with unrealistic claims of substantial returns from cryptocurrency mining operations, even though the company had no involvement in such operations.
Between June 2020 and November 2022, Lee and his associates offered and sold investment contracts to victims through HyperFund’s online platform. The scheme’s promotional materials contained false and too-good-to-be-true claims, assuring investors that they would receive daily passive rewards of 0.5% to 1% until their initial investment was doubled or tripled.
To convince investors that HyperFund could make these payments, they falsely claimed that the funds would come from revenues generated by large-scale crypto-mining operations, which the company did not actually possess.
It was also revealed that HyperFund began blocking investor withdrawals in July 2021.
The masterminds behind the Hypercapital scheme include Sam Lee, an Australian citizen residing in Dubai, who co-founded HyperFund and operated under various names such as HyperTech, HyperCapital, HyperVerse, and HyperNation. Rodney Burton from Miami and Brenda Chunga from Maryland were found to be the main promoters of HyperFund.
Criminal charges have been filed against the individuals involved. Lee is charged with one count of conspiracy to commit securities fraud and wire fraud, Burton faces charges of operating an unlicensed money-transmitting business, and Chunga pleaded guilty to securities fraud and wire fraud. The maximum penalty they could face is five years in prison.
Assistant Attorney Nicole M. Argentieri stated, “We are dedicated to exposing complex frauds involving cryptocurrency and digital assets and holding those responsible accountable.” The authorities emphasized the scale of the alleged fraud and cautioned against falling for unrealistic promises, whether in cryptocurrency fraud or any other financial scam. They assured that they will take action against perpetrators of such schemes.
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