“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 Securities and Exchange Commission (SEC) has charged Xue Lee and Brenda Chunga with involvement in a fraudulent crypto asset pyramid scheme called HyperFund.
This scheme, active from June 2020 to early 2022, raised over $1.7 billion globally. Lee and Chunga allegedly promoted “membership” packages promising high returns from crypto asset mining and ties to a Fortune 500 company.
However, the SEC claims that HyperFund was a pyramid scheme with no real revenue source other than investor funds. The scheme collapsed in 2022, preventing investor withdrawals.
“Noncompliance in the crypto space facilitates schemes”
The SEC’s complaint, filed in Maryland, accuses Lee and Chunga of violating federal securities laws, seeking various penalties and injunctions. Chunga has agreed to settle, with terms to be determined. The case against Lee will proceed in court.
Additionally, the U.S. Attorney’s Office for the District of Maryland has announced criminal charges against Lee and Chunga. Chunga pleaded guilty to conspiracy to commit securities fraud and wire fraud.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, 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. 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.”
