By Michael Scott
The Securities and Exchange Commission (SEC) tabled a new filing on Monday, January 29, alleging the HyperVerse crypto fraud hired an actor from Thailand as its chief executive when launching in 2021. The new file is for a freshly filed SEC complaint.
According to a lawsuit from the United States securities regulator, at least two people were behind an alleged $1.7 Billion cryptocurrency “fraud” scheme that once promised investors plans to list on the Hong Kong stock exchange and even hired an actor to play as the firm’s CEO.
SEC Pursuing HyperVerse Ponzi Scheme Masterminds
The newly filed complaint by the SEC levels charges against Xue Lee and compatriot Brend Chunga for orchestrating the HyperVerse fraudulent scheme. The regulator’s filing alleges that the duo ran the scheme using several names, including HyperTech, HyperVerse and HyperFund.
The accused allegedly promoted various membership packages to unsuspecting investors by advancing falsified promises. The two defendants promised impressive returns from investing in the crypto mining operations. The complaint by the SEC reveals that the duo spent the ill-gotten funds to acquire luxury cars, funding crypto wallets and condos.
In an earlier engagement, the SEC revealed that Chunga has agreed to settle the fraud charges by paying the civil penalties that the court will ascertain at a future date.
Nonetheless, Chunga is alongside Lee battling charges from the Maryland Districts, where the Attorney’s office alleges they conspired to commit securities and wire fraud. The complaint notes that Chunga pled guilty to all counts. The prosecutors have also charged Rodney Burton for his role in the scheme.
One occasion, the SEC filing revealed that Lee had informed the recruiters that HyperTech would list 2022 on the Hong Kong (HK) stock exchange. The regulator said the pair would flash fake screenshots to explain their appearances on mainstream media, including CNN. Also, the pair shared a screenshot when appearing in an Amazon Prime documentary titled ‘ Next: Blockchain’ to bolster the firm’s reputation.
SEC claims that the fraudulent firm went ahead to recruit a Thailand actor in a role to promote the HyperVerse launch. The fake actor would portray the chief executive.
SEC submitted that the individual presented as Steven Lewis was playing a fabricated character, not the HyperVerse chief.
The securities watchdog submitted in the filing that Lee persuaded more recruits into HyperVerse through a pyramid scheme by leveraging a referral system. The existing members would earn rewards whenever they recruited new investors.
Fraudsters Conveying False Promises to Lure Investors
The pair falsely promised that the recruits would participate in HyperVerse’s initial coin offering at a discounted 20-30% of the market value.
SEC accuses Chunga of raking in $3.7 million spent in acquiring a house valued at $1.2 million in Maryland. Another $1.1 million was spent acquiring a condo in Dubai, designer clothing and BMW. SEC added that Lee benefited from the scheme by receiving $140,000 in crypto into his controlled wallet.
The SEC’s head of enforcement division, Gurbir Grewal, illustrated in a January 29 statement that decried the fraudulent schemes that were openly non-compliant with the US Securities laws. The business operations from mid-2020 till May 2022 reveal the rampant nature of fraud targeting the crypto sector.
Grewal echoes the complaint held by the SEC, indicating that Lee and Chunga won investors’ trust by attracting profit returns from investing in the firm’s crypto asset mining. In contrast, HyperFund succeeded in mining investors’ pockets, not the promised crypto assets.
HyperVerse Fund Orchestrator Facing Australia’s ASIC Probe
The SEC sought permanent injunctive relief in its filing. It petitions the court to grant conduct-based injunctions that would bar the defendants from subsequent multilevel marketing and crypto offerings. The securities regulator is seeking the disgorgement of ill-gotten gains besides the settlement of civil penalties.
SEC submitted that Chunga is a Maryland resident while the compatriot Lee is an Australian reportedly residing within the United Arab Emirates (UAE).
A January 23 publication by The Guardian reveals that Lee is reportedly facing a probe by the Australian Securities Investment Commission (ASIC). The securities regulator alleges that Lee orchestrated the now-failed Blockchain Global. The crypto business imploded in 2021 while owing $58 million to the creditors.
The Guardian publication adds that the Australian regulator is pursuing charges against two other partners of Lee, identified as Ryan Xu and Allan Guo, for breaching the country’s Corporations Act.
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