A federal grand jury charged an online influencer known as “Bitcoin Rodney” and two other people in Maryland with orchestrating a $1.89 billion cryptocurrency fraud scheme.
The three are charged with defrauding investors and falsely told 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; Rodney Burton, known as “Bitcoin Rodney,” 54, of Miami, Florida and Brenda Chunga, 43, of Severna Park. Chunga pleaded guilty.
Burton, who was arrested and is being detained, 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 to be detained, citing strong evidence, including witnesses, transaction records and recorded calls, and that Burton was arrested at an airport with a one-way ticket to the United Arab Emirates, according to court documents.
Notably, 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.
Investors in HyperFund were told they could earn up to 1% in daily passive rewards and eventually double or triple their initial investment, 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 fiat currency to another cryptocurrency called Tether via a digital exchange, and then transferred Tether to Hyperfund and finally exchanging the Tether for HU, according to court documents.
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.
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 has a sentencing scheduled for March. Lee is not in custody.
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.
This story will be updated.