Crypto pyramid schemes thought to have stolen billions go unchecked

Two alleged crypto pyramid schemes estimated to have racked up billions in combined losses for investors have reportedly been left unchecked in Australia despite warnings from numerous financial watchdogs around the globe.

The schemes, which have operated under various names, including HyperFund and HyperVerse, are part of the wider HyperTech group run by Sam Lee and Zijing ‘Ryan’ Xu.

HyperTech was set up in 2020 and since then has been subject to warnings from organizations in New Zealand, Canada, the UK, and Germany.

Indeed, just last year, the Hungarian central bank issued a statement urging consumers to do their due diligence before putting any money into HyperVerse or HyperFund. It likened HyperTech to a “suspected pyramid scheme,” and claimed that the only source of income was payments from new entrants.

It also claimed that “there is a significant chance that investors may permanently lose part or all of their invested capital,” (via the Guardian).

Chainalysis estimates that HyperVerse alone has caused $1.3 billion in investor losses while The Guardian also estimates investor losses may also be in the billions.

Australia not yet suspicious of HyperTech

HyperVerse investors reportedly use crypto to purchase subscriptions that supposedly garner daily returns of 0.5% in so-called ‘hyper units.’ They’re also encouraged to climb the ranks through the recruitment of new members.

According to the Guardian, while the UK, New Zealand, Canada, Germany, and Hungary have all denounced HyperTech and its affiliated brands as unregulated and suspicious, Australia hasn’t. 

Read more: Australia dismantles crime syndicate that moved nearly $1B in crypto

So far the Australian Securities & Investments Commission (ASIC) has made no note of HyperTech Group or its affiliates. ASIC told The Guardian, “In relation to the issuing of warnings, actions by different regulators in different jurisdictions will depend on the evidence of activities occurring in that jurisdiction and the legislation available.”

Lee, dubbed ‘the crown prince of bitcoin,’ is said to be living in Dubai while Xu, known as ‘one of China’s four bitcoin kings,’ remains off the radar. The pair previously founded Blockchain Global before it collapsed owing creditors $58m.

Blockchain Global Liquidators referred the two of them to ASIC, claiming that they “may have contravened” the Corporations Act. ASIC reportedly took no further action.

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