U.S. authorities on Monday charged three people in connection with the incident. be USD 1.89 billion cryptocurrency fraud scheme, two of whom allegedly defrauded investors through fake cryptocurrency mining operations. A third defendant also pleaded guilty on the same day.
Two people have been charged with involvement in a nearly $2 billion cryptocurrency fraud scheme. A third member also pleaded guilty on the same day. (Photo: Alesia Kozik, Pexels, license)Sam Lee, 35, and “Bitcoin Rodney” Rodney Barton, 54, are responsible for coordinating the scheme through online investment platform Hyperfund. The two co-conspirators are said to have falsely claimed to investors that they could guarantee a double or triple return on their investments, even though the platform did not actually mention crypto asset management. .
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department's Criminal Division said, “As alleged in court documents, the defendants falsely represented that investors would receive substantial profits paid from cryptocurrency mining operations.'' “We made a claim, but in fact the benefit did not exist.”
Co-conspirator Brenda Chunga, aka “Bitcoin Beauty,” 43, admitted her role in the fraud scheme.
From June 2020 to November 2022, the group will promote Hyperfund to prospective investors, offering a “membership'' guarantee of up to 1 percent return each day until customers double or triple their initial investment. He is said to have sold a package titled “Regulation System”.
To sell the lie that the platform could meet such standards, the group advertised that payments would be distributed from large-scale cryptocurrency mining operations, authorities said.
But in reality, Hyperfund was unable to carry out such investment operations, since nothing was programmed to do so.
“Mr. Lee and Mr. Chunga lured investors with the lure of profits from cryptocurrency mining, but Hyperfund only mined investors' pockets,” said a director at the Securities and Exchange Commission's (SEC) Division of Enforcement. says Gubir S. Grewal of .
“This case shows that non-compliance in the cryptocurrency space is exploiting the promise that promoters can make easy money without providing the detailed investor protection disclosures required by the registration provisions of federal securities laws,” he said. “This shows once again how much the government is encouraging schemes to do things like that.”
By July 2021, Hyperfund began blocking investor withdrawals.
If convicted, Lee could face up to five years in federal prison for conspiracy to commit securities fraud and wire fraud. Prosecutors said he currently resides in the United Arab Emirates, which does not have an extradition treaty with the United States.
Meanwhile, Barton was arrested and charged with one count each of conspiracy to operate an unauthorized money transfer business and one count of operating an unauthorized money transfer business. If convicted, he faces up to 10 years in prison.
As part of Chunga's plea agreement, she admitted to personally profiting up to $3 million from her role in the conspiracy. The judge said she will repay the full amount of at least $3 million in restitution in addition to a potential five-year sentence, but the final penalty could be significantly higher.
The SEC issued a warning to crypto investors in 2013, warning that criminals are using cryptocurrencies to lure people into pyramid schemes and defraud unsuspecting investors.
Sometimes we just need a reminder.
“The level of alleged fraud here is astonishing,” said Erek L. Baron, United States Attorney for the District of Maryland. “Whether it’s crypto fraud or other financial fraud, if it sounds too good to be true, it probably is.”
