HyperVerse was a nearly $2 billion fraudulent crypto investment scheme with a fake CEO at its helm, the U.S. Securities and Exchange Commission (SEC) and a grand jury allege in a lawsuit and criminal indictments against two of its leaders.

The online investment business, which variously carried brands including HyperFund, HyperCapital and HyperTech, is said to have taken as much as $1.89 billion from people around the world who were drawn in by promises of quick riches. The business began around June 2020.

The SEC lawsuit alleges that Sam Lee, an Australian founder who lives in the United Arab Emirates, and Brenda "Bitcoin Beutee" Chunga, a promoter of the business from Maryland, cheated investors with this "pyramid and Ponzi scheme." Chunga agreed to settle the SEC accusations, the agency said.

"HyperFund even hired an actor to pretend to be the new CEO when HyperVerse was launched," according to an SEC complaint filed Monday, detailing that the executive known as Steven Reece Lewis, who delivered a speech during the launch event, was a TV presenter who lives in Thailand.

"With no apparent legitimate source of revenues, investor withdrawals were paid with new investor deposits," the SEC alleged in the complaint.

A request for comment sent to the company didn't get an immediate response.

"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,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.

The SEC said Chunga took about $3.7 million personally and spent it on a BMW, designer clothing, a $1.2 million home in Maryland and a $1.1 million condo in Dubai. Lee took $140,000 in digital funds to a wallet under his control, according to the complaint.

An indictment dated Jan. 25 in the U.S. District Court for the District of Maryland accused Lee and Cunga in a conspiracy to commit wire fraud.

The SEC also accused them of offering unregistered securities and demanded they give back any ill-gotten gains. If the court accepts the deal, Chunga agreed to settle the charges, accepting a ban on certain activities and to fines that would be determined by the court.

Earlier this month, U.S. authorities arrested and charged Rodney Burton for allegedly defrauding more than $7 million through the same fake investment scheme, according to allegations from the U.S. Internal Revenue Service.

Founders of HyperTech, Lee and his business partner Ryan Xu, also founded the collapsed Australian bitcoin company Blockchain Global, which owes creditors $58 million.

Elizabeth Napolitano contributed reporting.

UPDATE (January 29, 2024, 23:04 UTC): Adds comment from the SEC enforcement director and the settlement of Chunga.

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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.