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$1.89B Crypto Scam Uncovered: DOJ Charges Three in Massive Fraud Scheme

2 mins
Updated by Kyle Baird
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In Brief

  • Three individuals are charged for colluding in crypto fraud, with allegations pointing to an amount of nearly $2B.
  • An Australian citizen is under charges for founding the company, while two Americans face charges of promoting the firm.
  • The US DoJ asserts that HyperFund, deceived individuals with false promises of high returns on crypto mining operations.
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The United States Department of Justice has filed charges against three individuals, accusing them of collaborating in a fraudulent cryptocurrency operation totaling nearly $2 billion.

An Australian citizen faces charges for founding the purported fraudulent operation, while two Americans are accused of promoting the company on his behalf.

Crypto Scam Promised High Rates of Return

The US Department of Justice recently asserted that Australian citizen Sam Lee, residing in Dubai, co-founded HyperFund. The regulator alleges that HyperFund enticed individuals with misleading promises of high returns on crypto mining operations.

“The defendants are charged with defrauding investors to the tune of $1.89 billion. As alleged in court documents, the defendants falsely represented that investors would receive substantial returns paid from cryptocurrency mining operations, which did not in fact exist.”

Read more: What Is a Rug Pull? A Guide to the Web3 Scam

The agency emphasized to investors the advice that if an investment appears too good to be true, it likely is. This is a warning frequently given to novice investors.

The company claimed substantial returns to investors, promoting expectations of doubling or even tripling their initial investment.

“HyperFund’s promotional materials allegedly made various false claims, including that investors who purchased HyperFund “memberships” would receive between 0.5% to 1% daily in passive rewards until the company either doubled or tripled the investor’s initial investment.”

Notable Crypto Scams

This follows recent reports of a substantial decline in crypto scamming and hacking revenues in 2023 compared to previous years. There was a notable 29.2% drop in crypto scams in 2023 compared to 2022.

The report also highlighted a shift in tactics, with many crypto scammers adopting romance scam strategies, commonly referred to as “pig butchering.” This approach targeting individuals adds a layer of complexity to the scams, making them more challenging to uncover.

However, in the last year, Scam Sniffer found that wallet drainers took about $295 million from around 324,000 victims.

Value Stolen Through Suspected Approval Phishing Scams, May 2023-Nov 2023. Source: Chainalysis.
Value Stolen Through Suspected Approval Phishing Scams, May 2023-Nov 2023. Source: Chainalysis.

Read more: 15 Most Common Crypto Scams To Look Out For

However, it seems that scammers are turning their attention to elderly citizens, who may seem an easier target from whom to extort funds.

In September 2023, BeInCrypto covered an incident in which an 82-year-old individual fell victim to a scam. The perpetrator posed as a representative from the US Federal Trade Commission, persuading the elderly individual to grant access to his computer under the pretense of aiding in fraud prevention.

Instead, the scammer successfully coerced the 82-year-old into transferring small amounts of Bitcoin in an attempt to ensnare supposed hackers.

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.