The U.S. Division of Justice (DOJ) introduced on June 17 that Rodney “Bitcoin Rodney” Burton, 56, of Miami, has pleaded responsible to conspiracy to function an unlicensed cash transmitting enterprise associated to the promotion of HyperFund.
The DOJ described HyperFund as a world cryptocurrency fraud scheme that took in roughly $1.8 billion from buyers. Burton’s responsible plea is the most recent authorized improvement within the prolonged federal investigation into the scheme.
Bitcoin Rodney Pleads Responsible
Burton pleaded responsible in federal courtroom to conspiracy to function an unlicensed cash transmitting enterprise, associated to his position in selling HyperFund. In keeping with the DOJ, the responsible plea is tied to actions going down between June 2020 and January 2022, throughout which Burton and others offered cash transmitting companies to assist the scheme.
Along with his promotional position, the DOJ said that Burton managed a number of corporations offered as consulting companies, which in actuality operated as unlicensed cash transmitting companies. These corporations had been used to course of fund flows for HyperFund, whereas Burton straight benefited from cash introduced into the scheme by buyers.
In keeping with the plea settlement, Burton personally acquired at the very least $7,851,711 in proceeds from the unlicensed cash transmitting operation, together with cash from HyperFund victims in Maryland. This determine is the quantity the DOJ straight tied to Burton, separate from the $1.8 billion scale that the company attributed to the complete HyperFund scheme.
He faces a most sentence of 5 years in federal jail. The sentencing listening to is scheduled for 11:00 AM on July 23 earlier than U.S. District Decide Richard D. Bennett in Maryland.
How HyperFund Labored
HyperFund was promoted as a cryptocurrency funding platform that bought “membership packages” to buyers. In keeping with the DOJ, promotional supplies promised “passive returns” of 0.5% to 1% each day till the preliminary funding doubled or tripled.
HyperFund claimed that payouts got here from large-scale cryptocurrency mining operations. The SEC said that the scheme additionally promoted associations with a Fortune 500 firm. Nonetheless, the DOJ mentioned HyperFund didn’t have the mining operations as claimed, whereas the SEC alleged that the scheme had no actual income aside from investor funds.
In keeping with the DOJ, HyperFund started blocking withdrawal requests in 2021. By 2022, the SEC said the scheme had collapsed, leaving buyers unable to withdraw their funds.
Different Defendants within the HyperFund Case
The DOJ introduced the prison case associated to HyperFund in January 2024. The company accused Sam Lee, an Australian citizen dwelling in Dubai, of being a co-founder of the scheme; Burton and Brenda Chunga had been additionally named within the filings.
In keeping with the press launch at the moment, HyperFund was also called HyperTech, HyperCapital, HyperVerse, and HyperNation. Chunga pleaded responsible to conspiracy to commit securities fraud and wire fraud. Lee was indicted for conspiracy to commit these two acts; the costs in opposition to him usually are not but a courtroom ruling. In keeping with the DOJ case web page, Chunga’s sentencing listening to is presently scheduled for June 29, 2026.
SEC’s Separate Civil Motion
On the identical day, January 29, 2024, the SEC filed a civil lawsuit in opposition to Sam Lee and Brenda Chunga in federal courtroom in Maryland. The company alleged that HyperFund was a cryptocurrency pyramid scheme that raised greater than $1.7 billion from world buyers. The SEC press launch described this as a parallel motion to the DOJ’s prison case.
The criticism alleged that Lee and Chunga violated anti-fraud and registration provisions of the federal securities legal guidelines. The SEC seeks everlasting injunctions, conduct-based injunctions prohibiting the defendants from taking part in multi-level advertising or crypto choices, disgorgement of ill-gotten beneficial properties, prejudgment curiosity, and civil penalties.
Chunga agreed to settle the civil costs, together with an injunction in opposition to future violations; the quantity of disgorgement and penalties will likely be decided by the courtroom, and the settlement is topic to courtroom approval. In its 2024 press launch, the SEC said that the costs in opposition to Lee will proceed to be litigated in courtroom.
