DOJ Levels Charges to a Trio Alleging Involvement in $1.89 Billion Crypto Scam
The United States Department of Justice (DOJ) revealed in its Monday, January 29 statement that it levelled charges against a trio accused of masterminding the $1.89B crypto scam using HyperFund.
The trio, identified as two Americans and an Australian national, faces a five-year sentence if convicted of the fraudulent scheme using the proposed decentralized finance (DeFi) platform – HyperFund.
DOJ Charges Orchestrators of Fraudulent ‘DeFi’ Platform Hyperfund
The Justice Department claims the Australian citizen actively orchestrated the crypto scam by co-founding the HyperFund. He involved Americans Rodney Burton and Brenda Chunga to promote the purported DeFi platform.
The DOJ submitted that the trio participated in defrauding investors $1.89 billion while claiming they would earn investment returns from what the prosecutors identified as non-existing crypto mining operations.
The Maryland District’s Attorney, Erek Barron, expressed astonishment at the nature of the fraud. He indicated that the scheme sounded too good to be valid regardless of the nature of the fraud.
Barron declared that the Attorney’s Office would hold the trio accountable for the fraud schemes in partnership with the law enforcement partners.
The Justice Department indicated that the HyperFund scheme operated between June 2020 and November 2022, with the trio offering and selling investment contracts to unsuspecting public members via the HyperFund.
HyperNation Masterminds Mislead Investors with False Claims of Passive Rewards
The masterminds falsely claimed that investors earn daily 0.5 – 0.1% of passive rewards. The investors would draw the earnings until HyperFund triples or double the initial investment.
The Department of Justice revealed in a Tuesday, January 30 post on X (formerly Twitter) that the trio’s platform HyperFund misled the investors by claiming it would partially disburse payments from the revenues derived from the crypto-mining operations. The DOJ dismissed the claim as misleading since HyperFund never ran such mining operations.
The Justice Department disclosed that beginning in July 2021, the HyperFund fraudulent operations began revealing the platform blocking investor withdrawals.
Chunga and Lee face charges alleging conspiracy to perpetrate securities and wire fraud. Burton is facing charges of operating an unlicensed money-transmitting business.
The DOJ observed that the HyperFund utilized other words, including HyperCapital, HyperNation, HyperTech and HyperVerse.
The prosecutor indicated that Chunga had already pleaded guilty and added that the trio would serve a maximum five-year sentence upon their conviction.
Chunga will face sentencing on May 1 with the federal district court tasked with ascertaining the sentence per the sentencing guidelines and additional statutory factors.
US Regulatory Agencies Declare War Against Crypto Scam
The Justice Department declared that though crypto crimes have become common, it partners with federal and state agencies to avert scams and schemes. The DOJ hailed the Securities and Exchange Commission’s (SEC) input in action against fraudulent schemes involving digital assets.
The charging of the HyperFund scam trio comes after blockchain intelligence firm TRM Labs revealed in its December report that over $1.7 billion worth of crypto was stolen in 2023.
The prevalence of scams became evident at the onset of this year when hackers deployed wallet drainers and stole $4 million via scams and fake airdrops targeted at Solana (SOL) holders.
The IRS Criminal Investigation agent David Meisenheimer revealed that the illegal activities of HyperFund nature warrant coordinated effort among law enforcement partners to deter them.
Meisenheimer hailed the incredible input from Homeland Security Investigations (HSI) in New York as part of the El Dorado Task Force. He commended the HSI Baltimore enforcement officers for their collaboration in shielding American investors from the trio of financial predators.
Meisenheimer added that charging the masterminds of the $1.9 billion crypto scam conveys a clear message that the US has internal fortitude to safeguard the financial systems from crypto-based fraud. Besides, he added that the charges result from diligent investigations and the prosecution of criminal actors who desire to defraud the unsuspecting American public.
