HyperVerse Crypto Scheme: $1.89B Ponzi Fraud with Fabricated CEO

HyperVerse Crypto Scheme: $1.89B Ponzi Fraud with Fabricated CEO

The U.S. Securities and Exchange Commission and a grand jury alleged that HyperVerse was a $1.89 billion fraudulent crypto investment scheme that paid old investors with new deposits, according to SEC filings. The platform, which operated under multiple names including HyperFund, HyperTech, HyperOne, and HyperNation, attracted investors worldwide before collapsing and leaving participants unable to access their funds. Regulatory agencies across multiple countries issued warnings or took enforcement action against the scheme, which operated approximately from 2018 to mid-2023.

What Was HyperVerse?

HyperVerse was a cryptocurrency investment platform that promised investors daily returns of 0.5 percent to 1 percent, effectively doubling or tripling initial investments. The platform marketed itself as a decentralized platform for trading, gaming, and socializing.

Investors, called “Voyagers,” were encouraged to purchase membership packages and recruit new participants. According to CEL Solicitors, HyperVerse was both a pyramid scheme and a Ponzi scheme. Members who recruited others received a cut of referral profits, while existing members’ returns were funded by deposits from new participants. The SEC stated that the platform had “no apparent legitimate source of revenues” and that “investor withdrawals were paid with new investor deposits.”

Scale of Financial Losses

The financial damage from HyperVerse was enormous. CoinDesk reported that the SEC and a grand jury alleged HyperVerse was a nearly $1.89 billion fraudulent investment scheme. Blockchain analytics firm Chainalysis estimated that victims had lost a combined $1.3 billion to the scam.

The scheme’s reach extended globally, with particular impact in developing nations across Asia, Africa, and the Pacific. In Nepal, individuals who took bank loans to invest reportedly experienced severe financial and emotional distress when unable to withdraw funds. In Australia, thousands of investors lost millions through the scheme.

The Fabricated CEO

In January 2024, Guardian Australia revealed that the man who presented as CEO Steven Reece Lewis at HyperVerse’s launch event was a fabricated identity. The SEC complaint stated that “HyperFund even hired an actor to pretend to be the new CEO when HyperVerse was launched.”

Promotional materials claimed Lewis held degrees from Cambridge and Leeds and had experience at Goldman Sachs. Extensive searches uncovered no records of his existence. The universities had no trace of him in their databases, and no corporate filings corroborated his work history. Despite this, celebrity endorsements from figures including Steve Wozniak and Chuck Norris were used to lend the scheme credibility.

Regulatory and Legal Actions

Multiple financial regulators issued warnings about HyperVerse. The Hungarian central bank warned in August 2022 that the project was a “suspected pyramid scheme” with “no real economic activity.” Regulators in Canada, Germany, New Zealand, and the United Kingdom also raised alarms.

In January 2024, the U.S. Internal Revenue Service charged Rodney Burton, known as “Bitcoin Rodney,” for allegedly promoting the scheme and defrauding investors of over $7 million. The SEC filed a lawsuit against Sam Lee, an Australian founder living in the United Arab Emirates, and Brenda Chunga, a promoter from Maryland. Chunga agreed to settle and later pleaded guilty to conspiracy to commit securities and wire fraud.

Lee and his business partner, Ryan Xu, were also founders of the collapsed Australian Bitcoin company Blockchain Global, which owes creditors over $50 million.

Warning Signs Investors Should Recognize

The HyperVerse case offers clear lessons for crypto investors. Promises of daily returns of 0.5 percent to 1 percent, equating to 180 percent to 365 percent annually, are unrealistic and a hallmark of Ponzi schemes. Recruitment-based reward structures where existing members earn from new members’ deposits are characteristic of pyramid schemes.

The use of fabricated leadership, unverifiable credentials, and celebrity endorsements should raise immediate red flags. BrokerChooser’s analysis notes that HyperVerse is not regulated by any top-tier regulatory authority. The fundamental rule remains: if promised returns seem too good to be true, they almost certainly are. Investors should verify whether platforms are registered with recognized financial regulators before committing funds.

Ongoing Risks and Regulatory Gaps

Despite facing charges, Sam Lee reportedly revealed a new investment scheme called VEND shortly after the charges were filed. This underscores the persistent nature of such operations. The HyperVerse case has prompted scrutiny of regulators, particularly the Australian Securities and Investments Commission (ASIC), which did not issue consumer warnings even as its counterparts in other countries did.

For the crypto industry, cases like HyperVerse reinforce the need for the kind of regulatory framework currently being debated in the U.S. Congress. Clear rules, licensing requirements, and enforcement capacity are essential to protecting investors from schemes that exploit the complexity and novelty of digital assets.

Frequently Asked Questions

Is HyperVerse a legitimate investment? No, the SEC and multiple international regulators have identified it as a fraudulent Ponzi and pyramid scheme.

How much money did HyperVerse take from investors? The SEC alleges the scheme collected as much as $1.89 billion from investors worldwide before collapsing, with Chainalysis estimating victim losses at $1.3 billion.

Who founded HyperVerse? Sam Lee and Ryan Xu, Australian blockchain entrepreneurs who also founded the collapsed company Blockchain Global, created the scheme.

Was the CEO of HyperVerse real? No, the person presented as CEO Steven Reece Lewis was fabricated and played by an actor, according to SEC filings and Guardian Australia’s January 2024 investigation.

What should I do if I invested in HyperVerse? Consult a legal professional who specializes in crypto fraud recovery and report the loss to the relevant authorities.

How can I identify crypto scams? Look for unrealistic return promises (such as 0.5-1% daily returns), recruitment-based rewards, unverifiable leadership, and the absence of regulatory registration with recognized financial authorities.

Are there similar scams still operating? Yes, some operators launch new schemes after previous ones collapse; always verify platforms through independent regulatory databases.