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In a complaint filed Monday, the SEC said that Sam Lee, Xue Lee, also known as Bitcoin Beautee, and Brenda Chunga raised more than $1.7 billion from investors from June 2020 to early 2022.

The SEC alleged that Lee and Chunga promoted HyperFund as an opportunity to invest in profitable mining operations, but that it was actually a pyramid scheme with no real source of income.

The SEC also alleged that both Lee and Chunga “knew or were reckless in not knowing” that the scheme was fraudulent.

The scheme collapsed in 2022, and investors lost their money.

The director of the SEC’s Enforcement Division explained (HyperFund)

“This case once again shows how non-compliance in the crypto space can facilitate schemes where promoters take advantage of the promise of easy money without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws,” said Gurbir S. Grewal, director of the SEC’s Enforcement Division.

The SEC filed the complaint in federal district court in the District of Maryland, charging Lee and Chunga with violating the antifraud and registration provisions of the federal securities laws. The U.S. Attorney’s Office for the District of Maryland also filed criminal charges against Lee and Chunga.

Chunga previously pleaded guilty to conspiracy to commit securities fraud and bank wire fraud.

She also agreed to pay restitution and civil penalties in amounts to be determined by the court.

Here is a more concise translation:

The SEC charged the founders of HyperFund with fraud, alleging that they raised more than $1.7 billion from investors through a fraudulent investment scheme. The scheme collapsed in 2022, and investors lost their money.

The SEC also filed criminal charges against one of the founders.

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