SEC accuses HyperFund founders of $1.7B crypto ‘Ponzi’ scheme
HyperFund founders Lee and Chunga sued over $1.7B crypto fraud. Pending court approval by Chung, Lee agreed to take legal action. Additional charges have been filed by the U.S. Attorney's Office.
The US Securities and Exchange Commission (SEC) has taken significant legal action against individuals allegedly involved in an estimated $1.7 billion cryptocurrency ‘Ponzi' scheme involving HyperFund, HyperVerse and HyperTech.
The individuals charged are Zhu Li, also known as Sam Li, and Brenda Chunga, also known as Bitcoin Beautee. They were accused of orchestrating fraudulent schemes that defrauded investors and violated federal securities laws.
Fake membership plans
The SEC's indictment, filed on January 29, 2024, alleges that Sam Lee and Brenda Chunga engaged in deceptive practices by selling investors bogus “membership” plans that promised lucrative returns that did not materialize. They misrepresented their affiliation with a Fortune 500 company by misrepresenting their relationship with the Fortune 500 company by misleading investors by claiming huge profits from HyperFund's cryptocurrency mining operations.
Brenda Chunga is accused of personally obtaining $3.7 million in fraudulent purchases of a $1.1 million condominium in Dubai, a $1.2 million home in Maryland and a BMW. On the other hand, Shu Li is accused of receiving around $140,000 worth of cryptocurrencies deposited into a crypto wallet under his control.
Chunga, who currently lives in Maryland, entered into a settlement with the SEC, agreeing to refrain from future violations of securities laws and to pay a fine, pending court approval. But the SEC is currently taking legal action against Shue, who lives in the United Arab Emirates, for fraud and registration violations, to stop his involvement in the same fraudulent activity, recover ill-gotten gains and impose additional penalties.
In addition to the SEC charges, the U.S. Attorney's Office in Maryland filed charges of wire and wire fraud against Lee and Chunga. Chunga reportedly confessed to her role in the scheme.
Further investigations revealed Lee's ties to Hyperverse, another suspected scam targeting individuals in Asia, Africa and the Pacific. The SEC speculates that Lee may be connected to other cryptocurrency industry scams, highlighting the ongoing challenges of fraudulent activity in the crypto industry.
Australian national Shu Li is under investigation by the Australian Securities Investments Commission over his links to Blockchain Global, which owed creditors $58 million when it collapsed in 2021. Li and his business partners, Alan Guo and Ryan Xu, may be in breach of Australian Corporations Law.
