Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), referred information about a US$1.89 billion “pyramid scheme” known as Hyperverse to Victoria Police in 2020. But no action was taken, and the watchdog referred it again almost two years later.
The ASIC referred the company to Victoria Police for “possible criminal fraud” after concerns were raised with corporate regulators about its affiliate company Blockchain Global. The HyperVerse crypto investment scheme was operated by HyperTech Group, founded by two of Blockchain Global's directors, Sam Lee and Ryan Xu.
An ASIC spokesperson said, “Asic provided information relating to the HyperVerse matter to Victoria Police in 2020 after being informed that VicPol was investigating the HyperVerse matter. [alleged] and after determining that it was not a financial product and that the police were in the best position to investigate. [alleged] There is a possibility of criminal fraud.”
Neither ASIC nor Victoria Police provided further details about the alleged act.
“ASIC takes seriously any fraudulent activity that harms investors and we have the authority to act against fraudulent activity in relation to financial products and services,” the spokesperson said. “When we become aware of conduct that is outside of our jurisdiction, we seek to refer information about that conduct to the appropriate authorities.”
However, Victoria Police said it had assessed that information and decided after almost two years that ASIC was “best placed to investigate further”.
Meanwhile, Blockchain Global went bankrupt and owed creditors $58 million, while Mr. Xu and Mr. Lee were allegedly involved in a “global multi-level marketing and marketing of crypto-assets” as per the U.S. Securities and Exchange Commission. Mr. Xu is not named in the SEC's lawsuit.
A Victoria Police spokesperson confirmed it received a referral from ASIC in April 2020, but the matter was not assessed until 2021. After that assessment, “it was decided that the lead agency should be ASIC”.
The matter was transferred back to ASIC in January 2022. Asked why the process took 22 months, a Victoria Police spokesperson said: “For matters of this nature, the first step is to determine whether a criminal offense has been committed and whether it is best to approach Victoria Police. Depending on the situation, it may take some time.”
A spokesperson declined to comment on the content of the evaluation.
Mr. Ashiq said he believes he is acting on this referral. “ASIC understands that this matter is being actively considered by VicPol. Ultimately, VicPol is best placed to explain its decision to refer this matter back to ASIC,” the spokesperson said.
“At the time VicPol referred the matter back to ASIC, an external administrator had been appointed to Blockchain Global. ASIC is currently considering the information contained in the liquidator’s report relating to this scheme.”
At the time ASIC was referred to Victoria Police, the first Hyper scheme, ‘HyperCapital’, was underway and launched in Hong Kong in 2019. Meanwhile, HyperCapital was rebranded to HyperFund in 2020 and became HyperVerse in December 2021.
Mr. Lee denied claims that the scheme was a fraud and defended his role at HyperVerse as limited to the technical and financial management aspects of the business. Members were offered memberships to HyperVerse, where they could explore the HyperVerse ecosystem. There were returns of 0.5% per day and a 300% return over 600 days. HyperUnits were linked to various crypto tokens and could be withdrawn and converted into other cryptocurrencies once matured.
Mr Lee also did not mention that he had resigned from Blockchain Global’s board of directors and that the company was no longer in business.
According to court documents, Brenda Chunga, a senior U.S. promoter charged and pleaded guilty to conspiracy to commit securities fraud and wire fraud, hired Hypertech Group and Blockchain Global to potentially promote the scheme. Mr. Chunga emphasized his connection with Blockchain Global to give the HyperFund project credibility and increase security of investment.
Ashiq defended his failure to issue a warning about the Hyperfund and Hyperverse investment schemes. Mr. Lee declined to answer questions from Guardian Australia, and Mr Hsu could not be reached for comment.
Source: www.theguardian.com
