The US Department of Justice announced on Monday that an Australian and two Americans have been charged with orchestrating a $1.9 billion cryptocurrency fraud based on the alleged DeFi platform Hyperfund.
The Department of Justice identified Australian national Sam Lee as a co-founder of Hyperfund, with Rodney Barton and Brenda Chunga promoting Hyperfund in what the court called a “non-existent cryptocurrency mining operation.” They are accused of jointly defrauding investors of $1.89 billion by claiming that they would receive investment returns from the company.
“The level of alleged fraud here is astonishing,” Erek L. Barron, the U.S. attorney for the District of Maryland, said in a statement. “Whether it's crypto fraud or other financial fraud, it may sound too good to be true, but it probably is.
“Our office and our law enforcement partners will hold the perpetrators of these and other fraudulent schemes accountable,” Barron added.
According to the Department of Justice, from June 2020 to November 2022, the three solicited and sold investment contracts to the public through Hyperfund, offering investors 0.5% to 1% daily for their Hyperfund “memberships.” It is suspected that the court made false claims, such as awarding a passive interest rate of 10%. They receive compensation until the company doubles or triples the investor's initial investment.
Hyperfund claimed that part of the payout would be paid from proceeds from its large-scale cryptocurrency mining operations. The problem, the Justice Department said, was that there was no mining operation.
Hyperfund began blocking investor withdrawals starting at least in July 2021, according to the Justice Department.
Mr. Lee and Mr. Chunga are charged with conspiracy to commit securities fraud and wire fraud, and Mr. Barton is charged with operating an unauthorized money transfer business. Chong-Ah pleaded guilty. If convicted, the three could face up to five years in federal prison.
The Department of Justice said HyperFund is also known as HyperTech, HyperCapital, HyperVerse and HyperNation.
While crypto crimes are not new, the Department of Justice and other agencies, including the U.S. Securities and Exchange Commission, have stepped up efforts to curb fraud and schemes allegedly involving digital assets.
A report from blockchain intelligence firm TRM Labs last month said more than $1.7 billion in cryptocurrencies were stolen in 2023 alone. Earlier this month, a hacker used a so-called wallet drainer to steal more than $4 million through fake airdrops and scams targeting Solana holders.
The Department of Justice has not yet responded. of decryption Request for comments.
“The illegal activity alleged in this case is exactly what the IRS Criminal Investigation would do, and our law enforcement partners are committed to deterring it,” said David, Acting Special Agent in Charge of the IRS Criminal Investigation. Meisenheimer said. “These charges demonstrate that we have the tools and the fortitude to protect our financial system by diligently investigating, prosecuting, and holding accountable those who seek to deceive the American people.” It sends a clear message.”
Edited by Ryan Ozawa.
