As per the SEC, Chunga individually accumulated approximately $3.7 million from investors’ funds, spending it on personal luxuries like a BMW, designer clothing, and a $1.2 million residence in Maryland.
On Monday, January 29, the US Securities and Exchange Commission (SEC) slapped a lawsuit with criminal indictment charges against the two founders of HyperVerse. The SEC alleges that the two founders defrauded investors of $2 billion by luring them into a Ponzi scheme of fake crypto mining operations.
The SEC lawsuit contends that Sam Lee and Brenda “Bitcoin Beutee” Chunga, the founders of HyperVerse, engaged in a “pyramid and Ponzi scheme” under various names since 2020. The online investment venture, operating under different brands like HyperFund, HyperCapital, and HyperTech, has allegedly amassed up to $1.89 billion from individuals globally on false assurances of rapid wealth accumulation.
In their complaint filed on Monday, the SEC wrote:
“HyperFund even hired an actor to pretend to be the new CEO when HyperVerse was launched.”
The SEC stated that the individual identified as Steven Reece Lewis, who presented a speech during the launch event, is a television presenter residing in Thailand.
The securities regulator also added that “with no apparent legitimate source of revenues, investor withdrawals were paid with new investor deposits”.
HyperVerse Founders Spent on Luxuries
Lee and Chunga partnered with Ryan Xu creating a new entity dubbed Blockchain Global. However, this entity which faced bankruptcy in 2021, leaving creditors with a $58 million debt. Furthermore, Blockchain Global served as the parent company for ACX, a now-defunct crypto exchange based in Melbourne.
Gurbir Grewal, director of the SEC’s enforcement division said:
“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.”
According to the SEC, Chunga personally amassed around $3.7 million of investors’ funds, using the funds for personal luxuries such as a BMW, designer clothing, a $1.2 million residence in Maryland, and a $1.1 million condo in Dubai. Lee, on the other hand, allegedly took $140,000 in digital funds to a wallet under his control.
A recent indictment dated January 25, filed in the US District Court for the District of Maryland, accuses Lee and Chunga of conspiring to commit wire fraud. The SEC has further charged them with offering unregistered securities while demanding restitution of any gains obtained through illicit means.
As part of a potential settlement, Chunga has agreed to resolve the charges by accepting a ban on certain activities and consenting to court-determined fines. The legal proceedings are ongoing, awaiting the court’s decision on the proposed settlement.