Rodney Burton, aka “Bitcoin Rodney”, was arrested in Florida on January 4th, 2024.
Burton has been indicted on HyperFund fraud costs, filed as a part of a wider prison case in Maryland.
Following Burton’s arrest, he made his preliminary look within the Southern District of Florida.
Burton (proper) was ordered moved to the District of Maryland, the place a number of HyperFund associated indictments are believed to have been filed below seal.
An IRS agent affidavit filed in assist of Burton’s Grievance cites a “community of HyperFund promoters”, however at this stage it’s unclear who else has been charged.
Presumably the broader HyperFund prison case extends to co-founders Ryan Xu (aka Zijing Xu) and Sam Lee (aka Xue Lee).
Getting again to Burton, on January fifth he invoked his proper to stay silent. Then on January eighth the DOJ moved to reseal the unique docket submitting (particulars of the case).
This was authorised later the identical day. Fortunately Sarah Martin on the Guardian was in a position to entry the submitting between Burton’s arrest and the resealing. She was type sufficient to offer BehindMLM a replica.
As per the IRS supporting affidavit, Burton, as a promoter of HyperFund, has been charged with:
- working an unlicensed cash transmitting enterprise and
- conspiracy to commit working an unlicensed cash transmitting enterprise
The joint IRS-DOJ investigation into HyperFund is a part of a broader investigation into the HyperTech Ponzi schemes.
These Ponzi schemes embrace:
- HyperCapital – launched in 2020 following the collapse of HyperCash;
- HyperFund – launched later in 2020 following the collapse of HyperCapital;
- Hyperverse – launched in 2021 following the collapse of HyperFund; and
- HyperNation – launched in 2022 following the collapse of Hyperverse
HyperNation itself collapsed in Might 2023. In July 2023 Sam Lee claimed he was “rebuilding Hyperverse” however, so far as I do know, nothing got here of it.
Cited as a part of a “community of HyperFund promoters, the IRS affidavit states Burton and his co-conspirators
made fraudulent promotional displays to buyers and potential buyers.
In these displays, promoters touted HyperFund’s funding applications, together with the purported returns that potential buyers might earn from investing with HyperFund.
Amongst different representations, HyperFund falsely claimed that buyers who bought “memberships” would obtain between 0.5% to 1% each day in passive rewards till HyperFund doubled or tripled the investor’s preliminary funding.
The ruse behind HyperFund’s returns was “large-scale crypto mining operations”. Naturally, these didn’t exist.
HyperFund didn’t have any such operations.
To the extent buyers noticed the accrual of any rewards, these buyers had been paid with funds collected from more moderen buyers.
Burton carried out his HyperFund fraud by way of Burton Holdings Co. LLC, RBJ COnsulting Inc. and the Bit Group LLC.
Starting in or about July 2020—shortly after HyperFund was established—and thru in or about January 2022, BURTON accepted U.S. {dollars} from buyers in HyperFund, within the type of checks or wire transfers.
In trade for these funds and a 3 p.c charge, BURTON transferred a purportedly equal quantity of Tether cryptocurrency and/or HU from his HyperFund account to the buyers’ HyperFund accounts.
To launder HyperFund investor funds, Burton defrauded and instructed others to defraud banks.
BURTON communicated with different HyperFund promoters concerning accepting U.S. {dollars} in trade for Tether and/or HU.
He suggested Particular person 1, a resident of Anne Arundel County and one other HyperFund promoter, to instruct buyers to ship U.S. {dollars} (by way of wire or examine) with the memo line “Session/Coaching,” though no consulting providers had been rendered.
BURTON instructed Particular person 1 that the rationale for therefore instructing buyers was to keep away from drawing scrutiny from banks, because the banks may shut down their accounts.
Two “people” Burton labored with to steal cash by way of HyperFund are cited within the affidavit. The affidavit additionally quotes from textual content messages between the people and Burton.
On April 14, 2021, at 8:52 a.m., Particular person 2 texted BURTON “to ensure nothing is happening with Hyperfund” as a result of, amongst different causes “[y]ou stated don’t ship anymore cash up allow you to catch up.”
Two minutes later, at 8:54 a.m., BURTON responded saying “Lol, no nothing is improper. I stated let me catch up trigger
I obtained so many checks that ppl are sending me. I’m including to my portfolio. I nonetheless haven’t completed funding those I obtained.”
From this we are able to surmise that these co-conspirators are cooperating with authorities (as per the unique movement to seal Burton’s Florida docket, Burton was unaware of the case previous to his arrest). Whether or not the cited people have additionally been arrested stays unclear.
In March 2021, one Maryland sufferer cited within the affidavit misplaced $40,000 by way of wire switch to Burton Holdings Co. A further $10,000 was then wired to The Bit Group LLC.
In April 2021, the sufferer’s spouse would go on to wire an extra $20,500 to Burton Holdings Co.
Whereas that is unlikely to be the entire quantity Burton stole by way of the HyperTech Ponzi schemes, the IRS affidavit pegs preliminary ill-gotten features at $7.8 million.
I’ve reviewed financial institution information related to BURTON’s private financial institution accounts and the accounts for the businesses over which he has management.
Evaluation of those information present that from June 2020 by way of January 2022, BURTON acquired 562 wire transfers or cashier’s checks, totaling $7,851,711, from people who wished to spend money on HyperFund.
The vast majority of funds Burton stole by way of HyperFund had been laundered by way of Burton Holdings Co., a shell firm registered in Maryland.
An evaluation of those funds reveals that they originated from buyers within the District of Maryland and a minimum of twenty-six different states, one U.S. territory, and Canada.
If convicted, Burton faces as much as 5 years on each prison counts.
BehindMLM first got here throughout Burton as a promoter of uFun Membership again in 2015. In 2018 we got here throughout him once more with Dan Putnam’s EyeLine Buying and selling Ponzi.
After his run with the HyperTech Ponzi schemes, Burton has periodically appeared on BehindMLM as a promoter of assorted MLM crypto Ponzi schemes.
Circa August 2023, Burton was attempting to crack the MLM dietary supplements market by way of CannaGlobe.
As per his “Bitcoin Rodney” web site, Burton is/was presently selling the TradeLikeCrazy Ponzi scheme.
Past there most definitely being different HyperTech associated indictments nonetheless below seal, that’s all we all know for now. I’ve a quantity for Burton’s Maryland case however the docket and filings are nonetheless below seal.
It’s assumed we’ll get extra particulars pending additional HypterTech associated arrests.