DoJ Charges Three Individuals For A $ 1.89 Billion Crypto Fraud Scheme; Largest Catch So Far?

The post DoJ Charges Three Individuals For A $ 1.89 Billion Crypto Fraud Scheme; Largest Catch So Far? appeared first on Coinpedia Fintech News

In a press release by the Office of Public Affairs yesterday, it was announced that The Justice Department charged two individuals and the guilty plea of a third individual for orchestrating a $1.89 billion cryptocurrency fraud scheme named HyperFund.

Investors lured into scheme with fake promises

The three defendants are said to be charged with defrauding investors to the tune of $1.89 billion. According to the court documents, the trio falsely represented their intentions. They lured the investors into the scheme with unrealistic promises and said they would receive substantial returns from cryptocurrency mining operations. The company had nothing that existed in crypto mining.

From June 2020 to November 2022, Lee and the duo offered and sold investment contracts to the victims through HyperFund’s online investment platform. The scheme’s promotional materials made false claims that were too good to be true. It claimed that investors who purchased HyperFund “memberships” would receive between 0.5% to 1% daily in passive rewards until the company either doubled or tripled the investor’s initial investment. 

To convince the investors that HyperFund could make such payments, they further claimed that its payments would be disbursed in part from its revenues from large-scale crypto-mining operations when in truth, it did not have such operations. 

It was also reported that beginning in July 2021, HyperFund began to block investor withdrawals.

The three behind the Hypercapital scheme

Sam Lee, an Australian citizen residing in Dubai was charged for co-founding HyperFund. It also went by the names HyperTech, HyperCapital, HyperVerse and HyperNation. Rodney Burton of Miami and Brenda Chunga of  Maryland were found to be the main promotors of HyperFund.

Criminal charges

Lee is charged with one count of conspiracy to commit securities fraud and wire fraud. Burton is charged with a criminal complaint of operating an unlicensed money-transmitting business and one count of operating an unlicensed money-transmitting business. While Chunga pleaded guilty to committing securities fraud and wire fraud. The three can face a maximum penalty of five years in prison.

Conclusion

“We are committed to uncovering sophisticated frauds involving cryptocurrency and digital assets and bringing those who perpetrate them to justice,” said Assistant Attorney Nicole M. Argentieri.

The officers warned that the level of alleged fraud here is staggering. They said whether it’s cryptocurrency fraud or any other financial fraud, if it sounds too good to be true, it probably is. “This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”, they further boasted.