Feb 8, 2024 - Economy

Crypto project founder wanted on fraud charge is promoting new projects

Illustration of a crypto coin with a cut out mouth full of sharp shiny teeth and spit.

Illustration: Aïda Amer/Axios

The founder of HyperVerse, one of the many iterations of a crypto project accused by the U.S. Securities and Exchange Commission of being a pyramid scheme, continues to promote new projects.

Why it matters: It's become increasingly cool in crypto to publicly challenge regulatory authority, but Sam Lee, who's also wanted on U.S. criminal fraud charges, is testing the limits.

Driving the news: Lee, charged last month by Federal prosecutors and the SEC for fraud at HyperVerse, appeared in a 70-minute Facebook video a day later talking up a venture called VEND, as first reported by the Guardian.

What he's saying: "When you're here to do big things, you're here to piss off big people," Lee, an Australian citizen believed to be living in Dubai, says in the video with a laugh.

  • He did not directly address the charges he's facing in the U.S., but alluded to them when he said, "The worst is basically people lying to regulators, and regulators believing their version of the story."

That version, as alleged by Federal prosecutors, is that Lee and a co-defendant solicited investments promising passive rewards until the company either doubled or tripled an investor's initial investment.

  • The gains were said to come from revenue generated by a crypto mining operation which, according to prosecutors, didn't exist.
  • The scheme allegedly raised over $1.7 billion worldwide, and investors began having trouble making withdrawals in early 2022. The scheme finally collapsed that November, the SEC alleged in its civil complaint.

Details: In the new video in which Lee appears, a woman named Nandi instructs watchers on how to join the other projects, including one called Vendetta.

  • That one offers daily income denominated in the USDT stablecoin for watching videos; "rewards" would grow as more people join, she says.
  • "All you need to do to print money is just watch videos."

Another project called "Hope Alive" promises 1.5X potential income, though the condition to activate withdrawal is referring one person to it.

  • While the presenters are not financial advisers, the woman, says, "our intention is to create opportunities to improve lives."

Quick take: VEND is a Facebook page that purports to get people paid by watching other "founders" shill their crypto projects.

  • It intends to launch as many as 300 projects this year, the woman in the video says.

Of note: If convicted in the U.S. on the HyperVerse charges, Lee faces a maximum penalty of five years in prison, according to the DOJ.

💭 Our thought bubble: HyperVerse wasn't actually crypto in the first place, but rather just a plain alleged fraud wearing a crypto mask. One can say Lee's now trying to appropriate the industry's righteous indignation with regulators too.

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