Australian cryptocurrency entrepreneur Sam Lee has been charged for his alleged role in a US$1.89 billion ($2.85 billion) fraud scheme along with two others.
The US Department of Justice has announced charges against Lee, 35, along with US citizens Rodney Butron and Brenda Chunga for allegedly co-founding HyperFund, also known as HyperTech, HyperCapital, HyperVerse and HyperNation.
The trio is accused of defrauding investors by allegedly falsely representing that investors would receive substantial returns paid for cryptocurrency mining operations, which did not exist.
"The level of alleged fraud here is staggering," said U.S. Attorney Erek L. Barron for the District of Maryland.
The US Securities and Exchange Commission (SEC) has called it a fraudulent cryptocurrency pyramid scheme.
The SEC complaint highlighted that Lee knew or was reckless in not knowing that HyperFund was a pyramid scheme and had no real source of income other than funds received from investors.
According to court documents from the US Department of Justice, Lee and his co-conspirators allegedly offered and sold investment contracts to the public through the online investment platform HyperFund from June 2020 to November 2022.
False claims were allegedly made in the company's promotional materials, including that investors who purchased memberships would receive between 0.5 and 1 percent daily in passive rewards until the company doubled or tripled the investor's initial investment.
According to the US Department of Justice, HyperFund allegedly claimed that its payments would be disbursed in part from its income from large-scale crypto mining operations, but HyperFund had no such operations.
At least as of July 2021, HyperFund reportedly began blocking investor withdrawals.
