HyperVerse’s Alleged $1.7B ‘Ponzi’ Scandal: Fake CEO and Promised HK Listing

According to a lawsuit filed by the U.S. Securities and Exchange Commission (SEC), two individuals, Xue Lee (aka Sam Lee) and Brenda “Bitcoin Beautee” Chunga, were allegedly involved in a cryptocurrency fraud scheme that promised investors high returns and plans to list on the Hong Kong stock exchange. The scheme operated under various names, including HyperFund, HyperVerse, and HyperTech. The SEC claims that Lee and Chunga promoted membership packages to investors, falsely guaranteeing returns from cryptocurrency mining operations. They are accused of using the funds obtained from investors to purchase luxury cars, condos, and fund crypto wallets. Chunga has agreed to settle the charges and pay civil penalties, but both she and Lee are facing charges from the U.S. Attorney’s Office for conspiracy to commit securities fraud and wire fraud. Another individual, promoter Rodney Burton, has also been charged in connection with the scheme.

The SEC alleges that Lee claimed that HyperTech planned to list on the Hong Kong Stock Exchange by 2022 and used fake screenshots of media appearances to enhance the firm’s reputation. They even hired an actor to portray the CEO of HyperVerse. Lee also implemented a pyramid scheme-like referral system to incentivize existing members to recruit new investors. Lee and Chunga promised new recruits the opportunity to participate in initial coin offerings at below-market prices. Chunga personally took $3.7 million, which she spent on a house, a condo, a BMW, and designer clothing. Lee took around $140,000 in cryptocurrencies.

This case highlights the prevalence of fraud and noncompliance with U.S. securities laws in the cryptocurrency industry. The SEC’s Director of Enforcement, Gurbir S. Grewal, stated that HyperFund’s only achievement was emptying its investors’ pockets. The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, and civil penalties. Chunga resides in Maryland, while Lee, an Australian national, is believed to be living in the United Arab Emirates. Lee is also under investigation by the Australian securities regulator for another failed cryptocurrency business, Blockchain Global, which collapsed in 2021 with $58 million owed to creditors. The Australian Securities Investment Commission may pursue charges against Lee and his two business partners for potential breaches of the Corporations Act.