The SEC Takes Legal Action Against HyperFund Founders Over Alleged $1.9 Billion Ponzi Crypto Scheme

The U.S. Securities and Exchange Commission ( SEC ) has initiated civil proceedings against Sam Lee, also known as Xue Lee, and Brenda Chunga, known as \"Bitcoin Beautee,\" for their suspected roles in a worldwide cryptocurrency Ponzi operation called HyperFund, which is reported to have swindled investors out of $1.9 billion.

In conjunction, the U.S. Department of Justice ( DOJ ) has leveled criminal charges against two individuals, with a third person admitting guilt. The pyramid scheme reportedly ensnared investors globally with enticing promises of high returns between 2020 and 2022 before it crumbled.

The SEC's allegations claim that the duo promoted HyperFund as an investment platform for profitable cryptocurrency mining ventures, falsely asserting links to a well-known Fortune 500 firm. Nonetheless, the complaint contends that both Xue Lee and Brenda Chunga were either fully aware or completely reckless concerning HyperFund's operations as a pyramid scheme, as it apparently relied solely on investor deposits without any legitimate revenue sources. SEC’s Through this legal action, the SEC seeks lasting injunctive relief, injunctions based on conduct, recovery of the improperly acquired funds, pre-judgment interest, and substantial fines against both Xue Lee and Brenda Chunga. It’s worth mentioning that Brenda Chunga has opted to settle the charges, entering a plea of guilty to conspiracy for committing securities fraud and wire fraud.

The settlement terms include a permanent ban on future violations, along with the requirement to return ill-gotten profits and pay civil penalties, pending approval from the court. If found guilty, the accused could face a maximum prison sentence of five years. 

The Critical Need for Compliance in Crypto

Simultaneously, Gurbir S. Grewal, who heads the SEC’s Division of Enforcement, stressed the vital importance of compliance in the crypto industry, pointing out how noncompliance creates a breeding ground for promoters seeking to exploit the allure of quick profits without adhering to the essential disclosures required by federal securities laws.

In recent developments, U.S. authorities have taken action against Rodney Burton, a.k.a. ‘Bitcoin Rodney,’ for his alleged role in promoting the HyperFund scam, where he was accused of deceiving investors through a fraudulent investment scheme. compliance A group of HyperFund promoters active in Maryland and other regions held misleading promotional events targeting current and prospective investors. Rodney Burton, among others, received a total of $7,851,711 via 562 wire transfers or cashier’s checks from individuals.

This case underscores the ongoing difficulties faced by regulatory agencies in the crypto landscape, serving as a cautionary lesson for investors as they navigate this high-stakes arena. As investigations continue, the SEC remains alert, emphasizing the crucial need for investor education to help recognize and avoid such fraudulent operations. arrested and charged Following the HyperFund scandal, the SEC and DOJ's legal actions underline the pressing need for diligence, regulatory compliance, and educational initiatives designed to minimize risks in the rapidly evolving cryptocurrency market.

Securities and Exchange Commission

, it's important to clarify that the information on this page should not be construed as legal, tax, investment, financial, or any other professional advice. It is essential to invest only what you can afford to lose, and seeking independent financial guidance is advisable if you have any uncertainties. For more details, check the terms and conditions along with the help and support sections provided by the relevant issuer or advertiser. MetaversePost is dedicated to providing accurate and unbiased information, although market conditions may change without prior notice. cryptocurrency space Alisa, a passionate journalist for the Cryptocurrencylistings, focuses on areas such as cryptocurrency, zero-knowledge proofs, investments, and the vast arena of Web3. With a sharp intuition for spotting emerging trends and technologies, she provides in-depth coverage to keep readers informed and engaged in the constantly changing world of digital finance.

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