Australian Unchecked Crypto Schemes Lead to Millions in Losses

Regulatory Blind Spot in Australia

Investors in Australia are counting losses in the wake of crypto investment schemes, such as HyperFund and HyperVerse, escaping regulatory scrutiny despite international alerts branding them as potential scams. The schemes, led by Sam Lee and Zijing “Ryan” Xu, founders of the now-collapsed Blockchain Global, have left thousands globally unable to withdraw funds. Concerns arise about Australia’s regulatory role in warning investors and addressing high-risk schemes.


Sam Lee, the founder of the defunct cryptocurrency exchange Blockchain Global (Image Source: Blockchain Global’s Facebook)

Overseas Warnings Ignored

Financial watchdogs in the UK, New Zealand, Canada, Germany, and Hungary have issued warnings about Lee and Xu’s investment platforms. Despite the scrutiny abroad, the Australian Securities and Investments Commission (ASIC) has remained silent on the HyperTech group schemes. Lee and Xu have been associated with multiple crypto ventures, including StableDao and We Are All Satoshi, prompting regulatory actions and suspicions of fraudulent activities.


Image Source: BehindMLM

Lack of Regulatory Expertise

Chris Berg from RMIT’s Blockchain Innovation Hub highlights a regulatory challenge. The surge in crypto schemes during the pandemic has outpaced regulators’ technical expertise, leading to difficulties in identifying potential scams. Berg emphasises the need for education about scams in addition to crypto knowledge, addressing a substantial skill shortage among regulators.

Global Investor Losses

Investors in the Hyper group faced cryptocurrency payments for subscription packages, promising daily returns. The scheme’s structure, resembling a pyramid model, incentivized recruitment, leading to concerns about its sustainability. Many investors, unable to withdraw funds, faced challenges as the scheme’s failure unfolded. Reports suggest Australian investors have reported over $350 million in losses to crypto-based investment schemes since 2020.

Lee’s Vision Amidst Controversy

Lee, currently residing in Dubai, faces criticism for the schemes’ collapse. In Zoom meetings, Lee expressed ambitions to grow the Hyper community to a billion people, seeking 2% of the built value. The failure of HyperVerse and associated schemes has prompted questions about Lee’s accountability, with regulators facing calls for stricter measures against unchecked crypto ventures.

Calls for Regulatory Reform

As losses mount, calls for regulatory reform intensify. Danny De Hek, a YouTuber tracking Lee and Xu’s schemes, advocates for legal changes to flag individuals involved in such schemes. With losses potentially reaching billions, regulatory challenges persist. As investors demand accountability, the crypto landscape underscores the urgent need for robust regulatory measures.

A Regulatory Wake-Up Call

Amidst the chaos, regulatory bodies worldwide must reconsider their approach to crypto oversight. The surge in crypto schemes demands a proactive stance, with increased technical expertise and legislative reforms to protect investors from unscrupulous ventures. The HyperVerse debacle serves as a stark reminder of the urgent need for a comprehensive and globally coordinated regulatory framework.

* Original content written by Coinlive. Coinbold is licensed to distribute this content by Coinlive.