In a recent development, the U.S. Securities and Exchange Commission (SEC) has taken decisive action against the suspected orchestrators of the $1.7 billion HyperFund cryptocurrency pyramid scheme. Notably, Xue Lee, also known as Sam Lee, and Brenda Chunga, aka Bitcoin Beautee, find themselves at the center of a legal storm for their involvement in orchestrating a fraudulent venture that preyed on unsuspecting investors seeking high returns.
Meanwhile, the SEC accuses the duo of promoting HyperFund through deceptive means, promising returns from crypto mining operations and ties to a Fortune 500 company. Let’s delve into the details of this elaborate financial deception.
SEC Charges HyperFund Crypto Scheme Founders
The Securities and Exchange Commission (SEC) has taken decisive action against Xue Lee and Brenda Chunga, the alleged architects of the $1.7 billion HyperFund crypto pyramid scheme, the SEC said in its latest press release. According to the SEC’s complaint filed in the federal district court in the District of Maryland, Lee and Chunga operated a crypto scam from June 2020 to early 2022, attracting global investors with the promise of lucrative returns.
Notably, the SEC contends that the duo marketed HyperFund as an opportunity for investors to participate in profitable crypto asset mining operations and emphasized affiliations with a Fortune 500 company. However, the complaint alleges that Lee and Chunga were well aware, or at least recklessly ignorant, that HyperFund was a pyramid scheme devoid of any substantial revenue source aside from funds collected from investors.
Meanwhile, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, underscored the significance of compliance within the cryptocurrency space. In addition, he emphasized that noncompliance creates an environment where promoters can exploit the attraction of quick profits without fulfilling the essential investor protection disclosures mandated by federal securities laws.
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A Closer Look Into The Development
The SEC’s legal pursuit seeks permanent injunctive relief, conduct-based injunctions, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against Lee and Chunga. Notably, Brenda Chunga has agreed to settle the charges, pleading guilty to conspiracy to commit securities fraud and wire fraud.
Meanwhile, the settlement terms include a permanent injunction from future violations and payment of disgorgement and civil penalties, pending court approval. In addition, criminal charges have been filed by the U.S. Attorney’s Office for the District of Maryland against Lee and Chunga.
Notably, the case underscores the ongoing challenges faced by regulatory bodies in the crypto space and serves as a cautionary tale for investors seeking opportunities in this high-risk environment. As investigations continue, the SEC remains vigilant, emphasizing the need for investor education to detect and avoid such fraudulent schemes.
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