Federal prosecutors in Maryland are pursuing a criminal case involving an online cryptocurrency influencer known as “Bitcoin Rodney,” an associate known as “Bitcoin Beautee” and an international fugitive, all of whom are accused of orchestrating a $1.89 billion cryptocurrency Ponzi scheme.
The three are charged with fraud and falsely telling investors they would receive substantial returns from cryptocurrency mining operations that did not exist.
The three charged are Sam Lee, 35, an Australian citizen who lives in the Middle East; 54-year-old Rodney Burton, known as “Bitcoin Rodney,” of Miami, Florida, and Brenda Chunga, 43, of Severna Park. Chunga, known online as “Bitcoin Beautee,” pleaded guilty.
Burton, who was arrested and is being detained pending trial, is charged with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business. He was charged in January and his case was unsealed Thursday.
U.S. Magistrate Judge Erin Aslan in U.S. District Court in Baltimore ordered Burton held, citing strong evidence, including witnesses, transaction records and recorded calls, along with Burton receiving $40,000 a month in income and having yachts, cars and other assets.
The judge noted that Burton was arrested at an airport in Florida with a one-way ticket to the United Arab Emirates, according to court documents.
The United Arab Emirates does not have an extradition agreement with the United States.
Burton was a promoter of HyperFund, a “purportedly legitimate” cryptocurrency investment platform, and boasted about his investments on social media, according to court documents. Hyperfund is now defunct, according to a Securities and Exchange Commission complaint, after collapsing in 2022 because investors could no longer withdraw their investments.
Investors in HyperFund were told they could earn up to 1% in daily passive rewards and eventually double or triple their initial investments, according to court documents. HyperFund told investors they would be paid in part through large-scale cryptocurrency mining operations that did not actually exist, according to the documents.
HyperFund made use of an internal currency called “HU” or “hyper units” and claimed that it had one-to-one parity with the U.S. dollar. To obtain HU, investors converted government-issued currency to another cryptocurrency called Tether via a digital exchange, and then transferred Tether to Hyperfund, finally exchanging the Tether for HU, according to court documents.
However, the only way Hyperfund generated any income was funds from investors, and the group “had no basis for the promised returns” according to the SEC complaint, which called the entire operation “a pyramid and Ponzi scheme.”
Beginning in at least July 2021, the HyperFund platform began blocking the ability to withdraw HU from the platform, which meant investors could not convert it back into cryptocurrency and then back to U.S. dollars, according to court documents.
Chunga, who pleaded guilty in December, was known online by the nickname “Bitcoin Beautee,” according to court records.
Her main role in the organization was as one of its “top promoters and arguably the face to its United States Presence,” according to the SEC complaint. She received over $3.7 million directly from investors and from the HyperFund platform.
For example, Chunga “conducted multiple online investor meetings,” according to a plea agreement she signed.
According to the SEC complaint, in a video that was recorded in February 2021, Chunga said investors “will receive your initial membership [investment] in 6.5 months, let’s round it up to 7 months...You now have you initial investment amount back in your pocket. And then what happens after that? Everything else that’s coming to you every day after that, what is that? That is pure profit. You did not have to work for it.”
Burton and his co-conspirators’ goal in the conspiracy was ultimately to use the investors’ funds to enhance their own wealth, according to the indictment.
Chunga is scheduled to be sentenced in March. Lee has not been arrested. In the SEC complaint, authorities said they believe Lee lives in Dubai.
Lee was co-owner of Australian blockchain company Blockchain Global, which collapsed, owing creditors $58 million. If convicted, Lee faces a maximum sentence of five years in federal prison for conspiracy to commit securities fraud and wire fraud, according to the Department of Justice.
The SEC lawsuit resulted in a restraining order barring Chunga from taking part in marketing any future cryptocurrency and having to forfeit the profits of the HyperFund scheme. That amount will be determined at a future hearing.
The SEC case against Lee is pending.