SEC Charges Founder of $1.7 Billion “HyperFund” Crypto Pyramid Scheme and Top Promoter with Fraud
The SEC has charged Xue Lee and Brenda Chunga for orchestrating HyperFund, a crypto asset pyramid scheme that raised over $1
The SEC has charged Xue Lee and Brenda Chunga for orchestrating HyperFund, a crypto asset pyramid scheme that raised over $1.7 billion from global investors. The defendants allegedly promised high returns through crypto mining operations but instead relied solely on new investor capital to sustain the scheme. Lee and Chunga face charges for violating federal anti-fraud and registration provisions, with Chunga already pleading guilty to criminal conspiracy to commit securities and wire fraud. The SEC is seeking permanent injunctions, disgorgement, and civil penalties, while Lee’s charges remain subject to ongoing litigation.
The SEC has charged Xue Lee and Brenda Chunga for orchestrating HyperFund, a crypto asset pyramid scheme that raised over $1.7 billion from global investors. The defendants allegedly promised high returns through crypto mining operations but instead relied solely on new investor capital to sustain the scheme. Lee and Chunga face charges for violating federal anti-fraud and registration provisions, with Chunga already pleading guilty to criminal conspiracy to commit securities and wire fraud. The SEC is seeking permanent injunctions, disgorgement, and civil penalties, while Lee’s charges remain subject to ongoing litigation. The SEC charged Xue Lee and Brenda Chunga with operating HyperFund, a fraudulent crypto asset pyramid scheme that raised over $1.7 billion from investors worldwide by falsely promising high returns from non-existent mining operations. The complaint alleges violations of federal securities laws, including anti-fraud and registration provisions, as the defendants concealed the scheme's lack of legitimate revenue sources. While Lee faces ongoing litigation, Chunga agreed to a settlement involving permanent injunctions against future securities violations and the payment of disgorgement and civil penalties to be determined by the court. Parallel criminal charges were also filed by the U.S. Attorney’s Office, with Chunga pleading guilty to conspiracy to commit securities fraud and wire fraud. The Securities and Exchange Commission (SEC) charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in a fraudulent crypto asset pyramid scheme called HyperFund, which raised over $1.7 billion from investors globally between June 2020 and early 2022. The defendants promoted "membership" packages that falsely promised high returns from crypto mining and a Fortune 500 company association, while the scheme had no real revenue source other than investor funds. The SEC alleges violations of anti-fraud and registration provisions of federal securities laws and seeks injunctive relief, disgorgement, and civil penalties. Chunga agreed to settle, paying disgorgement and penalties, while Lee’s charges will be litigated. In a parallel criminal case, Chunga pleaded guilty to conspiracy to commit securities and wire fraud.
Extracted insights
- $1.70B $1.7 billion ≥$1B
- person gurbir s. grewal
- agency Securities and Exchange Commission
- agency the sec’s complaint
- agency the sec’s office of investor education and advocacy
- agency the sec’s ongoing investigation
- agency the securities and exchange commission
- scheme_term to conspiracy to commit securities fraud and wire fraud
- agency victims of the alleged fraud to contact [email protected]
- The Securities and Exchange Commission charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee)
- The SEC’s complaint alleges Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of revenue other than funds received from investors
- The HyperFund scheme collapsed in 2022
- Lee and Chunga promoted HyperFund “membership” packages
- Gurbir S. Grewal said “As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,”
- The SEC’s complaint charges Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws
- The complaint seeks permanent injunctive relief, conduct-based injunctions preventing the defendants from participating in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties
- Chunga agreed to settle the charges
- Chunga pleaded guilty to conspiracy to commit securities fraud and wire fraud
- The SEC’s ongoing investigation is being conducted by David Snyder and Assunta Vivolo, assisted by Tom Bedkowski, of the SEC’s Crypto Assets & Cyber Unit (CACU)
- The investigation is being supervised by David Hirsch and Jorge Tenreiro of the CACU and Nicholas Grippo and Scott Thompson of the Philadelphia Regional Office
- The litigation will be conducted by Judson Mihok and Gregory Bockin of the Philadelphia Regional Office
- The SEC’s Office of Investor Education and Advocacy directs investors to resources on detecting and avoiding pyramid schemes
- The SEC encourages victims of the alleged fraud to contact [email protected]
- Victims interested in learning about the criminal prosecution involving HyperFund should also visit the website https://www.justice.gov/criminal/case/hyperfund-and-associated-cases
The Securities and Exchange Commission today charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in a fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide. According to the SEC’s complaint, from June 2020 through early 2022, Lee and Chunga promoted HyperFund “membership” packages, which they claimed guaranteed investors high returns, including from HyperFund’s supposed crypto asset mining operations and associations with a Fortune 500 company. As the complaint alleges, however, Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of revenue other than funds received from investors. In 2022, the HyperFund scheme collapsed and investors were no longer able to make withdrawals. “As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This case illustrates yet again how noncompliance in the crypto space facilitates schemes where promoters capitalize on the promise of easy money, without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws.” The SEC’s complaint, filed in federal district court in the District of Maryland, charges Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing the defendants from participating in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. Chunga agreed to settle the charges, to be permanently enjoined from future violations of the charged provisions and certain other activity, and to pay disgorgement and civil penalties in amounts to be determined by the court at a future date. The settlement is subject to court approval. The charges against Lee will be litigated. In a parallel action, the U.S. Attorney’s Office for the District of Maryland today announced criminal charges against Lee and Chunga. Chunga pleaded guilty to conspiracy to commit securities fraud and wire fraud. The SEC’s ongoing investigation is being conducted by David Snyder and Assunta Vivolo, assisted by Tom Bedkowski, of the SEC’s Crypto Assets & Cyber Unit (CACU). It is being supervised by David Hirsch and Jorge Tenreiro of the CACU and Nicholas Grippo and Scott Thompson of the Philadelphia Regional Office. The litigation will be conducted by Judson Mihok and Gregory Bockin of the Philadelphia Regional Office. The Commission appreciates the assistance of the U.S. Attorney’s Office for the District of Maryland; the Department of Justice, Fraud Section; Homeland Security Investigations New York; and the IRS. The SEC’s Office of Investor Education and Advocacy directs investors to resources on detecting and avoiding pyramid schemes. Investors can find additional information about pyramid schemes at Investor.gov. The SEC encourages victims of the alleged fraud to contact [email protected]. Victims interested in learning about the criminal prosecution involving HyperFund should also visit the website https://www.justice.gov/criminal/case/hyperfund-and-associated-cases, which includes information about submitting a victim impact statement and details about potentially recovering their investments.
The Securities and Exchange Commission today charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in a fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide. According to the SEC’s complaint, from June 2020 through early 2022, Lee and Chunga promoted HyperFund “membership” packages, which they claimed guaranteed investors high returns, including from HyperFund’s supposed crypto asset mining operations and associations with a Fortune 500 company. As the complaint alleges, however, Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of revenue other than funds received from investors. In 2022, the HyperFund scheme collapsed and investors were no longer able to make withdrawals. “As alleged in our complaint, Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This case illustrates yet again how noncompliance in the crypto space facilitates schemes where promoters capitalize on the promise of easy money, without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws.” The SEC’s complaint, filed in federal district court in the District of Maryland, charges Lee and Chunga with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing the defendants from participating in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. Chunga agreed to settle the charges, to be permanently enjoined from future violations of the charged provisions and certain other activity, and to pay disgorgement and civil penalties in amounts to be determined by the court at a future date. The settlement is subject to court approval. The charges against Lee will be litigated. In a parallel action, the U.S. Attorney’s Office for the District of Maryland today announced criminal charges against Lee and Chunga. Chunga pleaded guilty to conspiracy to commit securities fraud and wire fraud. The SEC’s ongoing investigation is being conducted by David Snyder and Assunta Vivolo, assisted by Tom Bedkowski, of the SEC’s Crypto Assets & Cyber Unit (CACU). It is being supervised by David Hirsch and Jorge Tenreiro of the CACU and Nicholas Grippo and Scott Thompson of the Philadelphia Regional Office. The litigation will be conducted by Judson Mihok and Gregory Bockin of the Philadelphia Regional Office. The Commission appreciates the assistance of the U.S. Attorney’s Office for the District of Maryland; the Department of Justice, Fraud Section; Homeland Security Investigations New York; and the IRS. The SEC’s Office of Investor Education and Advocacy directs investors to resources on detecting and avoiding pyramid schemes. Investors can find additional information about pyramid schemes at Investor.gov. The SEC encourages victims of the alleged fraud to contact [email protected]. Victims interested in learning about the criminal prosecution involving HyperFund should also visit the website https://www.justice.gov/criminal/case/hyperfund-and-associated-cases, which includes information about submitting a victim impact statement and details about potentially recovering their investments.