In a major development, the Securities and Exchange Commission (SEC) has officially charged the HyperFund scheme with fraud and unregistered securities offering, revealing that Xue Lee and Brenda Chunga, also known as Sam Lee and Bitcoin Beautee, respectively, orchestrated a massive financial scam.
According to the SEC’s statement released on Monday, Lee and Chunga managed to raise over $1.7 billion from investors worldwide between June 2020 and early 2022. Despite promoting HyperFund as an investment opportunity in profitable mining operations, the SEC alleges that the project was, in fact, a pyramid scheme lacking genuine revenue sources. The regulatory body claims that both Lee and Chunga were either aware or recklessly indifferent to the fraudulent nature of their operation, resulting in significant financial losses for investors when the scheme collapsed in 2022.
Gurbir S. Grewal, the director of the SEC’s division of enforcement, emphasized the broader implications of the case, stating, “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.”
The SEC filed a complaint in the federal district court in the District of Maryland, accusing Lee and Chunga of violating anti-fraud and registration provisions within federal securities laws. Simultaneously, the U.S. Attorney’s Office for the District of Maryland has initiated criminal charges against the two individuals.
The case highlights the ongoing challenges and risks associated with investment schemes within the cryptocurrency space, underscoring the importance of regulatory oversight and investor due diligence.