The U.S. Department of Justice (DOJ) has criminally charged three individuals in connection with their alleged involvement in a crypto pyramid scheme that looted $1.89 billion from victims.
Australian Sam Lee is said to have co-founded ‘HyperFund’, an online investment platform that falsely claimed that investors who purchased ‘memberships’ would receive between 0.5% and 1% in passive rewards daily until the company returned their initial investment would double or triple.
HyperFund fraudulently claimed that the rewards came from large-scale crypto mining revenues, according to a new press release from the DOJ. The mining operation reportedly did not exist and the platform reportedly started to stop withdrawing customers in July 2021.
Lee was charged with conspiracy to commit securities fraud and bank fraud and faces up to five years in prison.
The DOJ has also charged Miami resident Rodney Burton with one count of conspiracy to operate an unlicensed money transmission business and one count of operating an unlicensed money transmission business. Burton is said to have promoted HyperFund.
One of the platform’s other initiators, Maryland resident Brenda Chunga, pleaded guilty to conspiracy to commit securities fraud and bank fraud and faces up to five years in prison. Chunga also agreed to pay at least $3 million in restitution to the victims.
In a parallel action, the U.S. Securities and Exchange Commission (SEC) also charged Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws.
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