Australian Entrepreneur Sam Lee Charged in the US for Alleged Role in $1.89 Billion Crypto Scheme

Australian blockchain entrepreneur Sam Lee is facing charges in the United States for conspiracy to commit fraud, relating to his alleged involvement in the HyperVerse crypto investment schemes. The court documents describe these schemes as a “pyramid and Ponzi scheme,” accused of defrauding investors of $1.89 billion (AUD 2.86 billion).

The US Attorney for the District of Maryland, Erek L Barron, emphasized the Department of Justice’s commitment to holding individuals accountable for fraud schemes. If convicted, Sam Lee could face up to five years in jail.

The criminal complaint filed in the District Court of Maryland charges Lee with conspiracy to commit securities and wire fraud. Additionally, a separate civil complaint by the US Securities Exchange Commission (SEC) accuses Lee of fraud and the unregistered sale of securities, violating the US Securities Act.

The charges against Sam Lee, previously known as the “crown prince of bitcoin” in Australia, coincide with the arrest of another HyperVerse and HyperFund crypto scheme promoter, Brenda Chunga. Chunga has pleaded guilty to conspiracy to commit securities and wire fraud.

The criminal complaint alleges that Lee and co-conspirators operated the Hyper schemes to unjustly enrich themselves by enticing investors. The complaint contends that Lee and his accomplices knowingly devised a scheme to defraud investors, involving false representations and promises.

If found guilty, the court orders Lee to “disgorge all ill-gotten gains” received directly or indirectly from the schemes.

The court documents reference various names for the funds operated by the HyperTech group, collectively known as HyperFund. Lee served as the chairman of the HyperTech group, co-founded with his business partner, Ryan Xu, who is not named in the court documents.

The charges follow an investigation by The Guardian Australia, revealing details of the scheme’s operations, investor losses, and connections to the collapsed Australian crypto company Blockchain Global, where Lee was a director.

The SEC complaint, filed against both Lee and Chunga, alleges involvement in a global crypto asset-related multi-level marketing pyramid and Ponzi scheme that raised over $1.7 billion from victims worldwide. The criminal complaint estimates the losses at approximately $1.89 billion from victim-investors globally.

The SEC claims that Lee played a central role in operating the HyperFund schemes, maintaining control throughout its existence. The complaint accuses Lee and Chunga of making false and misleading statements to investors, enticing them with promises of guaranteed high returns from investments in securities.

The court documents suggest that HyperFund operated as a Ponzi scheme, using funds from later investors to pay off early investors. The HyperFund rewards system is described as a pyramid scheme recruiting tool.

Despite living in Dubai since 2021, Lee, an Australian citizen, is now facing charges in the US. The charges result from a joint investigation by the Department of Homeland Security’s El Dorado taskforce and the Internal Revenue Service’s criminal investigation unit.

Notably, despite the involvement of Australian companies and Lee’s citizenship, Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), has not scrutinized the Hyper group of investor schemes. ASIC has committed to assessing the liquidator’s report into the collapsed Blockchain Global.

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