LUCKNOW (CoinChapter.com) — The US Securities and Exchange Commission (SEC) charged two key figures for running an alleged $1.7 billion Ponzi scheme, HyperVerse. They made lofty promises to investors, including plans to list on the Hong Kong Stock Exchange. According to a recent lawsuit, the fraudsters even hired an actor to portray him as the company’s CEO.
According to a Jan. 29 filing by the SEC, two people, Xue Lee (aka Sam Lee) and Brenda “Bitcoin Beautee” Chunga, promoted the fraudulent offerings under names like HyperFund, HyperVerse, and HyperTech.
Lee and Chunga lured investors by guaranteeing high returns through cryptocurrency mining and referral bonuses under the HyperVerse Ponzi scheme tactics. They allegedly used their ill-gotten money to purchase luxury cars, real estate assets, and other items.
Chunga has agreed to settle the SEC’s civil charges and will pay financial penalties to be decided by the courts. However, her legal troubles don’t end there. She and Lee also face criminal charges filed by the US Attorney’s Office in Maryland related to conspiracy to commit securities fraud and wire fraud. Chunga has already pleaded guilty to her role in those crimes.
Additionally, the SEC charged a third promoter named Rodney Burton for his involvement in the HyperVerse Ponzi scheme.
Fabricated IPOs and Bogus Publicity
The brazen deception knew no bounds. According to the SEC complaint, Lee once told recruitment staff that their main entity, HyperTech, was planning to have an initial public offering (IPO) on the Hong Kong Stock Exchange by next year. This was an outright fabrication to generate hype.
The SEC also alleges the pair actively misled investors by sharing doctored screenshots of mainstream media coverage, including fake appearances on CNN and an Amazon documentary series called “Next: Blockchain.” This false publicity aimed to deceive targets into believing the enterprises were legitimate.
A particularly bold marketing tactic was hiring a Thailand-based actor to pose as “Steven Reece Lewis,” the fake CEO of HyperVerse.
“In reality, the person presented as [Lewis] was an actor playing a role of a fabricated character. He was not the CEO,”
the complaint reads.
This crypto fraud involved more than just false promises of easy crypto riches. According to the SEC, Lee set up an illegal pyramid structure to incentivize victim recruitment. Existing investors were rewarded with bonuses and perks for bringing in fresh targets. Recruits were also given false assurances to access exclusive initial coin offerings (ICOs) at 20-30% below market prices.
The Whereabouts of HyperVerse Ponzi Scheme Stolen Fund
The complaint lays bare exactly where stolen funds were spent. Chunga personally took in $3.7 million she splurged on luxe real estate in Maryland and Dubai worth over $2 million combined. Additional indulgences included a BMW, designer garb, and exotic getaways. Meanwhile, Lee pocketed around $140,000 worth of crypto into his personal wallet.
This Ponzi scheme managed to fly under the radar for years. Director of the SEC’s Enforcement Division, Gurbir S. Grewal, noted in a Jan. 29 statement that lack of compliance and unchecked manipulation continue haunting the crypto industry.
As alleged in our complaint, Lee and Chunga attracted investors with profits from crypto mining, but the only thing HyperFund mined was its investors’ pockets
Grewal stated.
The SEC seeks permanent injunctions, return of funds, and penalties. Chunga agreed to settle the SEC charges, while Lee’s location is unknown.
