Australian cryptocurrency entrepreneur Sam Lee has been charged in the United States for his purported involvement in a $US1.89 billion ($2.85 billion) fraud scheme along with two others.
The US Department of Justice has brought charges against Mr. Lee, aged 35, along with US citizens Rodney Butron and Brenda Chunga, for allegedly co-founding HyperFund, known under various aliases such as HyperTech, HyperCapital, HyperVerse, and HyperNation.
The trio stands accused of defrauding investors by allegedly falsely claiming that investors would earn significant returns from cryptocurrency mining operations that, ac/cording to authorities, did not actually exist.
Erek L. Barron, US Attorney for the District of Maryland, remarked, “The level of alleged fraud here is staggering.”
The US Securities and Exchange Commission (SEC) has labelled the operation a fraudulent cryptocurrency pyramid scheme. According to the SEC’s complaint, Mr. Lee was aware or recklessly indifferent to the fact that HyperFund was a pyramid scheme and lacked any genuine source of revenue apart from investor funds.
Court documents from the US Department of Justice indicate that from June 2020 to November 2022, Mr. Lee and his associates purportedly offered and sold investment contracts through HyperFund’s online platform. Allegedly, false assertions were made in the company’s promotional material, including promises that investors would receive passive rewards ranging from 0.5% to 1% daily until their initial investment was doubled or tripled. HyperFund allegedly claimed that these payments would come from revenues generated by extensive cryptocurrency mining operations, which, authorities assert, were nonexistent.
Beginning in at least July 2021, HyperFund purportedly began to prevent investor withdrawals.
Mr. Lee faces charges of conspiracy to commit securities fraud and wire fraud, with a potential prison term of up to five years if convicted. Mr. Burton faces charges related to operating an unlicensed money-transmitting business, with a maximum penalty of five years imprisonment on each count. Meanwhile, Ms. Chunga has pleaded guilty to conspiracy charges and faces a maximum prison sentence of five years.
A federal district court judge will determine the sentences, considering the US Sentencing Guidelines and other relevant factors.
In October of the previous year, the liquidator of Blockchain Global entity ACX.io reported Mr. Lee to the Australian Securities and Investments Commission (ASIC) for possible violations of the Corporations Act.
Investigations have also linked Mr. Lee to several failed ventures abroad, including a rebranded multi-level marketing scheme called HyperVerse.