SEC charges leaders of HyperFund in $1.7B crypto pyramid scheme

The U.S. Securities and Exchange Commission (SEC) has taken legal action against two prominent figures connected to HyperFund, an alleged crypto pyramid scheme that raised over $1.7 billion. 

Sam Lee and Brenda Chunga, also known as Bitcoin Beautee, have been charged with promoting fraudulent “membership” packages, promising high returns to investors. The charges include fraud and unregistered offering violations of federal securities laws.

Allegations of deceptive promotions

Sam Lee and Brenda Chunga were accused of luring investors with enticing promises of substantial profits supposedly generated from HyperFund’s crypto asset mining operations and affiliations with a Fortune 500 company. However, the SEC alleges that the only thing HyperFund mined was the pockets of its investors.

Brenda Chunga, who operates under the pseudonym “Bitcoin Beautee,” reached a settlement with the SEC over fraud charges and unregistered offerings. As part of the settlement, she has agreed to be “permanently enjoined from future violations of the charged provisions and certain other activities.” 

Chunga is also required to pay disgorgement and civil penalties, with the specific amounts to be determined by the court later. It’s important to note that the settlement remains subject to court approval.

Sam Lee, on the other hand, faces litigation initiated by the SEC. The regulatory agency is pursuing legal action against him for alleged violations of anti-fraud and registration provisions of federal securities laws. 

The SEC’s complaint seeks permanent injunctive relief, conduct-based injunctions to prevent participation in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

In addition to the SEC’s actions, the U.S. Attorney’s Office of Maryland has brought criminal charges against Sam Lee and Brenda Chunga. 

Chunga has already pleaded guilty to conspiracy to commit wire and securities fraud. Lee, a citizen of Australia and resident of the United Arab Emirates, and Chunga, who resides in Maryland, face the legal consequences of their alleged involvement in HyperFund.

HyperVerse Connection

Furthermore, Sam Lee has been linked to another alleged crypto scheme, known as “HyperVerse,” which was initially reported by The Guardian. This separate scheme reportedly targeted investors across Asia, Africa, and the Pacific. 

The SEC’s actions against Lee highlight concerns about his involvement in multiple cryptocurrency-related schemes and the potential harm caused to unsuspecting investors.