SEC Charges HyperFund with $1.7 Billion Fraud

The U.S. Securities and Exchange Commission (SEC) has charged the crypto project HyperFund with defrauding investors of $1.7 billion.

According to the lawsuit, company founders Xu Li and Brenda Chunga, also known as Sam Li and Bitcoin Beautee, raised the aforementioned sum from “people worldwide” between 2020 and 2022.

The founders promoted HyperFund as an opportunity to “invest in profitable cryptocurrency mining operations,” but in reality, it was a financial pyramid with no real sources of income, the SEC claims. By the end of 2022, the project collapsed, and investors lost their funds.

According to the regulator, Li and Chunga “knew or were reckless in not knowing” that HyperFund was a Ponzi scheme.

“This case further illustrates how non-compliance in the crypto space facilitates schemes where promoters profit from promises of easy money without providing detailed disclosures for investor protection,” the SEC emphasized.

The agency charged the co-founders of HyperFund with violating federal securities laws related to fraud prevention and company registration. The U.S. Attorney’s Office for the District of Maryland has also filed criminal charges against them.

Chunga has already pleaded guilty to conspiracy to commit securities fraud. She agreed to settle the claims by returning the stolen funds and paying civil penalties, the amount of which will be determined by the court.

In August 2023, the SEC accused the mining company Digital Licensing, also known as DEBT Box, of fraudulently raising $50 million in cash, as well as undisclosed amounts in Bitcoin and Ethereum.