HyperVerse Crypto Hedge Fund Collapses, Resulting in $1.3 Billion Losses

Summary #

HyperVerse, a cryptocurrency hedge fund formerly known as HyperFund, collapsed, leading to a loss of approximately $1.3 billion for its customers. The fund, promoted by Australian entrepreneur Sam Lee and his business partner Ryan Xu, both founders of the now-defunct Australian bitcoin company Blockchain Global, has caught the attention of regulators across several countries, labeling it as a potential “scam” and “suspected pyramid scheme.” The CEO Steven Reece Lewis’s identity and background are under scrutiny, as his stated qualifications and work history are reportedly fabricated.

Attackers #

The founders of the failed Blockchain Global, Sam Lee and Ryan Xu, along with Rodney Burton, are the individuals implicated in the promotion of the scheme.

Losses #

HyperVerse’s collapse resulted in approximately $1.3 billion in customer losses.

Timeline #

• 2018: Sam Lee and Ryan Xu launched HyperCapital.
• June 11, 2020: The launch of HyperFund was announced in The Hyper Summit.
• October 2021: Blockchain Global, founded by Sam Lee and Ryan Xu, collapsed, owing creditors over $50 million.
• December 2021: Steven Reece Lewis was introduced as the CEO of HyperVerse in an online global launch event.
• February 16, 2023: Chainalysis, a blockchain data platform, published a post, pointing HyperVerse as a top scam incident by revenue in 2022.
• January 3, 2024, 02:00 PM UTC: The Guardian, a global news organisation, announced an investigation, confirming the chief executive of HyperVerse does not appear to exist.
• January 5, 2024: Rodney Burton, alleged HyperVerse promoter, was arrested by U.S. Authorities in FloRida.

Early Indicators #

Questionable Founder Backgrounds: Sam Lee and Ryan Xu’s previous association with the insolvent Blockchain Global raised doubts about their trustworthiness. Their ventures faced regulatory issues and their involvement with HyperVerse magnified concerns regarding their integrity.

Inadequate Regulatory Compliance: Despite warnings from multiple country regulators about being a potential “scam” and “suspected pyramid scheme,” HyperVerse was able to operate with insufficient regulatory oversight in Australia.

CEO Identity and Credentials Fabrication: Steven Reece Lewis, presented as the CEO, had questionable credentials. Investigations revealed that his alleged qualifications and career history are likely fabricated, casting further doubt on the legitimacy of the operation.