A massive HyperFund Crypto Scam that raised over $1.9 billion from investors worldwide under the name of HyperFund and other aliases has been busted by the U.S. authorities. The Department of Justice and the Securities and Exchange Commission announced on Monday that they have filed criminal and civil charges against three people involved in the fraudulent scheme, which collapsed in 2022.
HyperFund Crypto Scam: The False Promises that Lured Investors
According to the DOJ, the three defendants lied to investors that HyperFund would pay them huge returns from its non-existent cryptocurrency mining operations. Acting Assistant Attorney General Nicole Argentieri of the DOJ’s Criminal Division said that the defendants “defrauded investors to the tune of $1.89 billion.” U.S. Attorney Erek Barron for the District of Maryland called the level of fraud “staggering.”
HyperFund Crypto Scam: The Defendants and the Charges They Face
The three people charged for HyperFund Crypto Scam by the DOJ are Sam Lee, an Australian citizen residing in Dubai, United Arab Emirates, who allegedly co-founded HyperFund; Rodney Burton of Miami, who promoted HyperFund as “Bitcoin Rodney”; and Brenda Chunga of Severna Park, Maryland, who also promoted HyperFund as “Bitcoin Beautee”.
Lee, 35, also known as Xue Lee, faces one count of conspiracy to commit securities fraud and wire fraud. Burton, 54, faces one count of conspiracy to operate an unlicensed money-transmitting business and one count of operating an unlicensed money-transmitting business. Both men could face up to five years in prison if convicted.
Chunga, 43, pleaded guilty on Monday to one count of conspiracy to commit securities fraud and wire fraud, and faces the same potential sentence. She also agreed to settle the civil charges by the SEC, which accused her of violating the anti-fraud and registration provisions of U.S. securities laws. She will have to pay back the money she made from the scam and civil penalties to be determined later. The SEC complaint said that she received more than $3.7 million from HyperFund and from investors, and used it to fund her lavish lifestyle and recruit more victims by flaunting the wealth she claimed to have earned from HyperFund. Lee was also charged by the SEC with the same violations.
HyperFund Crypto Scam: How It Operated as a Pyramid Scheme
The DOJ said that from June 2020 to November 2022, Lee and his co-conspirators offered and sold investment contracts to the public through HyperFund’s online platform, promising them returns of between 0.5% and 1% daily until their initial investment doubled or tripled from the revenue generated by HyperFund’s large-scale crypto mining operations. However, HyperFund did not have any such operations, and was a pyramid scheme that relied on new investors’ funds to pay the existing ones. In July 2021, HyperFund started to block investors from withdrawing their money, the DOJ said.
HyperFund Crypto Scam: The Consequences and the Lessons Learned
The DOJ and the SEC said that they are working to recover the funds and assets of the victims of the scam, and to bring the defendants to justice. They also warned the public to be wary of any investment opportunities that sound too good to be true, and to do their due diligence before investing in any cryptocurrency-related ventures. They urged anyone who has information about the scam or the defendants to contact them.
HyperFund Crypto Scam: How to Avoid Falling for Similar Scams in the Future
Cryptocurrency scams are becoming more prevalent and sophisticated, as scammers take advantage of the hype and confusion surrounding the emerging technology. Here are some tips to avoid falling for similar scams in the future:
- Do your research. Before investing in any cryptocurrency project, check its legitimacy, reputation, and track record. Look for reviews, ratings, testimonials, and feedback from other investors and experts. Verify the identity and credentials of the people behind the project, and avoid anonymous or unverified sources.
- Be skeptical. If an offer sounds too good to be true, it probably is. Beware of unrealistic or guaranteed returns, high-pressure tactics, or limited-time offers. Don’t trust anyone who claims to have insider information, secret strategies, or special access to exclusive opportunities. Don’t let your emotions or greed cloud your judgment.
- Protect your assets. Never share your private keys, passwords, or personal information with anyone. Use a secure and reputable wallet, exchange, or platform to store and trade your cryptocurrencies. Enable two-factor authentication and encryption on your devices and accounts. Don’t click on suspicious links, download unknown files, or open unsolicited emails or messages. Always double-check the address, domain, and spelling of any website or app you use.