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SEC Cracks Down on $1.7 Billion HyperFund Crypto Fraud

The U.S. Securities and Exchange Commission has charged Xue Lee, also known as Sam Lee, and Brenda Chunga, commonly referred to as Bitcoin Beautee, for their roles in orchestrating the $1.7 billion HyperFund crypto scheme.

The charges against Lee and Chunga mark a significant step in the SEC’s mission to protect investors and maintain fair market practices in the rapidly evolving digital asset space. 

Deceptive Promotions and False Returns

In a significant enforcement action, the U.S. Securities and Exchange Commission (SEC) has charged Xue Lee and Brenda Chunga with masterminding the $1.7 billion HyperFund crypto pyramid scheme.

As detailed in a recent SEC press release, the complaint, filed in the federal district court of Maryland, alleges that from June 2020 to early 2022, Lee and Chunga lured investors worldwide with the promise of high returns from their fraudulent scheme.


The SEC’s case centers on the claim that the duo deceitfully promoted HyperFund as a golden opportunity to profit from crypto asset mining operations, bolstering their pitch with supposed affiliations to a Fortune 500 company.

However, the complaint suggests that Lee and Chunga either knew or were recklessly unaware that HyperFund was, in reality, a pyramid scheme, primarily sustained by the inflow of funds from new investors rather than any legitimate business activities.

Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, highlighted the broader implications of the case. He emphasized the crucial role of compliance in the cryptocurrency market, pointing out that failure to adhere to federal securities laws creates fertile ground for exploitation by promoters, who might entice investors with the allure of rapid gains while sidestepping necessary protections for investors.

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Legal and Financial Repercussions

In its legal battle against the alleged architects of the HyperFund scam, the SEC is pursuing comprehensive penalties and remedial actions. The commission seeks permanent injunctive relief to prevent future violations, conduct-based injunctions, disgorgement of the profits illegally obtained, prejudgment interest, and substantial civil penalties against Xue Lee and Brenda Chunga.

Notably, Brenda Chunga has opted to settle the charges. She has entered a guilty plea to conspiracy charges related to securities fraud and wire fraud. As part of her settlement, Chunga agrees to a permanent injunction barring future violations, along with the repayment of disgorged profits and civil penalties, subject to the approval of the court.

Additionally, the U.S. Attorney’s Office for the District of Maryland has initiated criminal proceedings against both Lee and Chunga. This dual approach of civil and criminal charges underscores the seriousness with which U.S. authorities are addressing the alleged fraudulent activities in the cryptocurrency sector, reflecting a growing trend towards stricter enforcement and regulation in this domain.

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SEC Remains Vigilant 

As the investigation into this case progresses, the SEC’s vigilant stance is clear. The commission is not only focused on enforcement but also on the importance of investor education.

By increasing awareness and understanding of potential red flags in crypto investments, the SEC aims to equip investors with the necessary tools to identify and steer clear of similar fraudulent schemes in the future, thereby fostering a safer and more transparent environment in the digital asset space.

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Donald Haymatter

Donald Haymatter is an expert broker with 15+ years of experience. He stays up-to-date with the latest financial news and trends to help clients make informed investment decisions. Donald is known for his analytical approach and personalized investment advice. Outside of work, he enjoys reading and mentoring young professionals.

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