SEC charges founders of $1.7 billion HyperFund scheme with fraud
Quick Take
- Xue Lee and Brenda Chunga raised over $1.7 billion from investors around the world in what the SEC calls a pyramid scheme, the SEC said.
The Securities and Exchange Commission has charged $1.7 billion HyperFund scheme with fraud and unregistered securities offering, the agency announced.
Xue Lee and Brenda Chunga — also known as Sam Lee and Bitcoin Beautee, respectively — raised over $1.7 billion from investors around the globe from June 2020 through early 2022, the SEC said in a press release on Monday.
Lee and Chunga advertised HyperFund as an opportunity to invest in profitable mining operations, but in reality, it was a pyramid scheme with no real sources of revenue, the SEC alleged, adding that both Lee and Chunga "knew or were reckless in not knowing." In 2022, the project imploded and investors lost their money.
“This case illustrates yet again how noncompliance in the crypto space facilitates schemes where promoters capitalize on the promise of easy money, without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws,” said Gurbir S. Grewal, director of the SEC’s division of enforcement.
The SEC filed the complaint in federal district court in the District of Maryland, charging Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws. The U.S. Attorney’s Office for the District of Maryland also pressed criminal charges against Lee and Chunga.
Chunga has already pleaded guilty to conspiracy to commit securities fraud and wire fraud. He also agreed to settle the charges and pay disgorgement and civil penalties in amounts that the court will determine.
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