A former Severna Park resident pleaded guilty Monday to securities and wire fraud charges after a judge unsealed allegations against her and two others affiliated with HyperFund, a cryptocurrency venture that federal authorities described as a billion-dollar fraud scheme.
Brenda Chunga pleaded guilty to a conspiracy charge at the U.S. District Court for Maryland, where federal prosecutors have filed charges alleging the business promised false returns to investors paid from “large-scale crypto mining operations” that didn’t actually exist.
The charges unsealed Monday also included an indictment against Australian blockchain entrepreneur Sam Lee, who prosecutors alleged co-founded the international scheme they said defrauded investors of $1.89 billion.
In the filings unsealed Monday, prosecutors accused Chunga, who sometimes went by “Bitcoin Beautee,” of selling fraudulent investment contracts through the venture’s online platform. In a social media video, Chunga described the business as “the world’s most sustainable passive rewards program” several months before it started blocking clients from making withdrawals, according to court records.
Chunga “personally received at least $3 million in fraud proceeds from her participation in the conspiracy,” according to her plea agreement. The U.S. Attorney’s Office for the District of Maryland said in a news release that she will be required to pay at least that amount back in restitution, and faces a maximum of five years in prison. She is scheduled to be sentenced May 1.
“The level of alleged fraud here is staggering,” U.S. Attorney Erek L. Barron said in a statement. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is.”
Chunga’s attorney, Jonathan P. Van Hoven, did not respond to a request for comment Monday afternoon. Chunga sold her home in Severna Park for $1.25 million last year, according to a deed dated just over a week before she and prosecutors signed their plea agreement in December. It was not immediately clear if she relocated after selling the home.
Purporting to be “legitimate decentralized finance,” the venture that also went by names such as HyperTech, HyperCapital, HyperVerse and HyperNation was a “global securities fraud and wire fraud scheme” that netted nearly $1.89 billion over the course of two years starting in 2020, according to the separate indictment against Lee, 35. That indictment says Chunga promoted the venture while she lived in Maryland, as did Rodney Burton, a Miami resident who went by “Bitcoin Rodney.”
The company claimed during a February 2021 presentation that those who purchased “memberships” would receive between 0.5% to 1% daily in “passive rewards,” doubling or tripling their investment with payouts funded by the business’s purported crypto operations, according to Lee’s indictment.
Investors were paid their rewards in “HU,” or “Hyper Units,” a trading currency that the business claimed was equivalent to the U.S. dollar, an IRS criminal investigations agent wrote in an affidavit supporting Maryland charges against Burton. The 54-year-old was arrested Jan. 4 in Florida on Maryland-based charges of conspiracy to operate an unlicensed money transmitting business, according to court records. At a hearing Monday in Baltimore, U.S. Magistrate Judge Erin Aslan ordered for Burton to remain detained, according to the news release.
Around the summer of 2021, the venture began to block investors from making withdrawals, as regulators in multiple countries started to issue warnings to consumers regarding the company. Subsequent investigations by The Guardian’s Australian news site found that there didn’t seem to be any record of HyperFund’s purported CEO existing and that the scheme targeted investors in developing countries who felt “suicidal” once they were blocked from withdrawing their funds.