Federal prosecutors in Maryland are pursuing a criminal case involving an online cryptocurrency influencer known as "Bitcoin Rodney," an associate known as "Bitcoin Beautee" and an international fugitive, all of whom are accused of orchestrating a scheme $1.89 billion cryptocurrency ponzi.
The three are accused of fraud and falsely telling investors that they would receive substantial profits from cryptocurrency mining operations that did not exist.
The three accused are Sam Lee, 35, an Australian citizen living in the Middle East; Rodney Burton, 54, known as “bitcoin rodney” of Miami, Florida, and Brenda Chunga, 43, of Severna Park. Chunga, known online as “Bitcoin Beautee,” pleaded guilty.
Burton, who was arrested and is being held pending trial, is charged with one count of conspiracy to operate a money transmission business without a license and one count of operating a money transmission business without a license. He was charged in January and his case was unsealed Thursday.
Federal Judge Erin Aslan of Baltimore District Court ordered Burton detained, citing compelling evidence, including witnesses, transaction records and recorded calls, and that Burton received $40,000 a month in income and owned yachts, cars and other assets. .
The judge noted that Burton was arrested at a Florida airport on a one-way ticket to the United Arab Emirates, according to court documents.
The United Arab Emirates does not have an extradition agreement with the United States.
Burton was a promoter of HyperFund, a "supposedly legitimate" cryptocurrency investment platform, and bragged about his investments on social media, according to court documents. Hyperfund no longer exists, according to a Securities and Exchange Commission complaint, after collapsing in 2022 because investors could no longer withdraw their investments.
HyperFund investors were told they could earn up to 1% in daily passive rewards and eventually double or triple their initial investments, according to court documents. HyperFund told investors they would be paid in part through large-scale cryptocurrency mining operations that did not actually exist, according to the documents.
HyperFund used an internal currency called “HU” or “hyperunits” and claimed it had a one-to-one parity with the US dollar. To obtain HU, investors converted the government-issued currency to another cryptocurrency called Tether through a digital exchange, and then transferred Tether to Hyperfund, ultimately exchanging Tether for HU, according to court documents.
However, the only way Hyperfund generated income was investor funds, and the group had "no basis for the promised returns" according to the SEC complaint, which called the entire operation "a pyramid and Ponzi scheme." .
At least as of July 2021, the HyperFund platform began blocking the ability to withdraw HU from the platform, meaning investors could not convert it back into cryptocurrency and then back into US dollars, according to court documents.
Chunga, who pleaded guilty in December, was known online by the nickname “Bitcoin Beautee,” according to court records.
Her primary role in the organization was as one of its “main promoters and possibly the face of its presence in the United States,” according to the SEC complaint. She received more than $3.7 million directly from investors and the HyperFund platform.
For example, Chunga “conducted multiple meetings with investors online,” according to a plea agreement he signed.
According to the SEC complaint, in a video recorded in February 2021, Chunga said investors “will receive their initial membership [investment] in 6.5 months, let's round it up to 7 months... Now you have your initial investment amount back in your pocket. And then what happens after that? Everything else that comes to you every day after that, what is that? That is pure benefit. “You didn’t have to work for it.”
The goal of Burton and his co-conspirators was to ultimately use investors' funds to enhance their own wealth, according to the indictment.
Chunga is scheduled to be sentenced in March. Lee has not been arrested. In the SEC complaint, authorities said they believe Lee lives in Dubai.
Lee was a co-owner of Australian blockchain company Blockchain Global, which collapsed and owed creditors $58 million. If he is convicted, Lee faces a maximum sentence of five years in federal prison for conspiracy to commit securities fraud and wire fraud, according to the Department of Justice.
The SEC's lawsuit resulted in a restraining order prohibiting Chunga from participating in the trading of any future cryptocurrency and having to forfeit profits from the HyperFund scheme. That amount will be determined at a future hearing.
The SEC's case against Lee is pending.
Cody Boteler, The Banner's Express Desk reporter, reporting on breaking news, trending stories and interesting things in and around Baltimore. His work has appeared in The Baltimore Sun, USA TODAY, Baltimore Magazine and others.
