The Securities and Exchange Commission (SEC) has filed charges against Xue Lee (also known as Sam Lee) and Brenda Chunga (also known as Bitcoin Beautee) for their involvement in a fraudulent cryptocurrency pyramid scheme named HyperFund. The scheme reportedly raised over $1.7 billion from investors globally.
The SEC alleges that Lee and Chunga raised funds from investors worldwide between June 2020 and early 2022, promoting HyperFund as an investment in profitable mining operations. However, the SEC claims that HyperFund was a pyramid scheme with no real sources of revenue, and both Lee and Chunga were aware or reckless in not knowing this. In 2022, the scheme collapsed, leading to investors losing their money.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated, “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 anti-fraud and registration provisions of federal securities laws. The SEC 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 has agreed to settle the charges by being permanently enjoined from future violations and paying disgorgement and civil penalties, with the settlement subject to court approval. Charges against Lee will be litigated.
The SEC's investigation is ongoing and involves its Crypto Assets & Cyber Unit (CACU). The Commission appreciates the assistance of various agencies, including the U.S. Attorney’s Office, the Department of Justice, Homeland Security Investigations New York, and the IRS.