In a significant legal development, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against two individuals, Xue Lee (also known as Sam Lee) and Brenda “Bitcoin Beautee” Chunga, for their alleged involvement in a massive $1.7 billion cryptocurrency fraud scheme. The lawsuit reveals a web of deceit that included false promises of listing on the Hong Kong stock exchange, staged media appearances, and pyramid-like referral systems.
Operating under various aliases, such as HyperFund, HyperVerse, and HyperTech, Lee and Chunga are accused of promoting multiple membership packages to investors, guaranteeing high returns from cryptocurrency mining operations. These ill-gotten gains were allegedly used to purchase luxury cars, condos, and fund cryptocurrency wallets.
Brenda Chunga has already agreed to settle the charges and pay civil penalties, with the exact amount to be determined by a court later. Both Chunga and Lee face charges from the U.S. Attorney’s Office for the District of Maryland, including conspiracy to commit securities fraud and wire fraud. Chunga has also pleaded guilty to these criminal charges, while a third individual, promoter Rodney Burton, has also been charged by prosecutors.
The SEC alleges that Lee went to great lengths to deceive investors, even claiming that HyperTech would be listed on the Hong Kong Stock Exchange by 2022. They further assert that Lee and Chunga fabricated screenshots of media appearances on CNN and an Amazon Prime documentary to enhance the company’s reputation.
In an astonishing twist, the fraudsters hired a Thai actor to impersonate the CEO of HyperVerse, with the actor playing a fabricated character named Steven Reece Lewis. The SEC stated, “In reality, the person presented as [Steven Reece] Lewis was an actor playing a role of a fabricated character. He was not the CEO of HyperVerse.”
Lee allegedly used a pyramid scheme-like referral system to entice new investors and falsely claimed that they could participate in initial coin offerings at prices significantly below market value.
Chunga is accused of personally receiving $3.7 million from the scheme, which she spent on a $1.2 million house in Maryland, a $1.1 million condo in Dubai, a BMW, and designer clothing. Lee is said to have taken approximately $140,000 in cryptocurrencies into a wallet under his control.
This case underscores the ongoing challenges of fraud and noncompliance with U.S. securities laws within the cryptocurrency industry. Gurbir Grewal, director of the SEC’s Division of Enforcement, emphasized, “Lee and Chunga attracted investors with the allure of profits from crypto asset mining, but the only thing that HyperFund mined was its investors’ pockets.”
The SEC is seeking permanent injunctive relief, conduct-based injunctions against the defendants, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. While Chunga resides in Maryland, Lee is an Australian national believed to be currently living in the United Arab Emirates. Lee is also under investigation by the Australian securities regulator for his involvement in the collapsed cryptocurrency business, Blockchain Global, in 2021. The Australian Securities Investment Commission may pursue charges against Lee and his associates for potential breaches of the Corporations Act.
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