HyperFund Founders Charged with $1.89B Crypto Scam and Ponzi Scheme

The Department of Justice has announced criminal charges against two founders of the HyperFund crypto investment scheme, alleging the massive operation defrauded investors out of $1.89 billion.

In parallel civil charges, the SEC accused HyperFund leaders of running an illegal pyramid scheme and falsely promising high yields from crypto mining revenues that didn’t exist.

Key Allegations:

• HyperFund founders are charged with securities and wire fraud.
• Promoters claimed crypto mining would fund investor payouts.
• SEC: In reality, no mining occurred. The operation was a pyramid scheme.
• By 2022, $1.7+ billion raised and withdrawals frozen.
• One promoter agrees to settle while other cases proceed.

Read more: Crypto Funds Record $500 Million In Net Outflows Last Week

Per statements, HyperFund advertised investment “memberships” that would pay guaranteed passive daily returns using profits from company crypto mining activities.

In reality, authorities contend no such mining infrastructure existed. The scam ultimately collapsed in 2022 after accumulating vast sums from public victims.

DOJ Acting AAG Nicole M. Argentieri said the stunning alleged fraud levels reflect the department’s commitment to prosecuting complex crypto and digital asset crimes.

One HyperFund marketer agrees to settle charges

“The defendants are charged with defrauding investors to the tune of $1.89 billion. As alleged in court documents, the defendants falsely represented that investors would receive substantial returns paid from cryptocurrency mining operations, which did not in fact exist,” said Argentieri.

Read more: Amazon Developing A Film Based On $3B Bitfinex Bitcoin Heist

According to the DOJ, Lee and his colleagues allegedly made false claims, including 0.5% to 1% daily passive rewards. One HyperFund marketer, Brenda “Bitcoin Beautee” Chunga, agreed to settle SEC charges, likely averting a trial.

However, cases against CEO Sam “Xue” Lee and other executives will continue to play out for allegedly masterminding the fraudulent operation. With both criminal and civil actions underway, authorities are trying to send a strict warning to fraudulent and Ponzi crypto schemes.