The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit accusing Xu Lee, also known as Sam Lee, and Brenda “Bitcoin Beautee” Chunga of participating in an alleged $1.7 billion cryptocurrency fraud scheme. The scheme operated under multiple names, including HyperFund, HyperVerse, and HyperTech. The SEC alleges that Lee and Chunga promoted various membership packages, making false promises of guaranteed high returns from the cryptocurrency mining business. The ill-gotten gains were allegedly used to purchase luxury cars and apartments and fund crypto wallets.
Chunga has reportedly agreed to settle the charges with the SEC and pay a civil penalty, while both she and Lee also face charges from the U.S. District Attorney's Office in Maryland for conspiracy to commit securities fraud and wire fraud. Chunga has pleaded guilty to these criminal charges. Another individual, promoter Rodney Burton, was also charged by prosecutors. The SEC claims that Lee told recruiters that HyperTech planned to list on the Hong Kong stock exchange in 2022 and that the two shared false media appearances to boost the company's reputation.
According to the SEC, Lee implemented a referral system similar to a pyramid scheme, rewarding existing members for recruiting new investors. False promises were made that new members could participate at a price 20-30% below market value. Chunga is accused of personally receiving $3.7 million for purchases including a $1.2 million home in Maryland and a $1.1 million condo in Dubai. Lee allegedly deposited about $140,000 in cryptocurrency into a wallet he controls. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
The alleged fraudulent activities took place between June 2020 and May 2022. Gurbir Grewal, director of the SEC’s Enforcement Division, stated that the case highlights ongoing fraud and non-compliance with U.S. securities laws in the cryptocurrency industry. The SEC aims to restrain the defendants from engaging in multi-level marketing or cryptocurrency offerings through a conduct-based injunction. Chunga resides in Maryland, while Lee is an Australian citizen believed to currently reside in the United Arab Emirates. Lee is also reportedly under investigation by Australia's securities regulator in connection with another failed cryptocurrency business, Blockchain Global, which collapsed in 2021 owing creditors $58 million. Charges may be brought against Lee and two business partners for possible breaches of the Corporations Act.
