Australian Regulator Comes Under Scrutiny for Failure to Report HyperVerse Crypto Scheme
The Australian Securities and Investments Commission (ASIC) is facing criticism for its failure to issue a warning against the HyperVerse crypto investment scheme. The agency has been accused of a lapse in its duties, even after international regulators had flagged the scheme as potentially fraudulent.
A previous investigation by Guardian Australia revealed significant losses suffered by retail investors in the HyperVerse scheme. The scheme had also been labeled as a probable scam and a suspected pyramid scheme. In fact, Chainalysis’ 2022 analysis of crypto scams named HyperVerse as one of the top revenue-generating scams, accumulating almost $1.3 billion.
Assistant Treasurer Stephen Jones raised questions about ASIC’s vigilance and response to international warnings, pointing out that authorities in the UK, New Zealand, Canada, Germany, and Hungary had issued warnings as early as 2021.
Jones emphasized the modus operandi of such schemes, stating, “This type of scheme works by convincing innocent people to invest their money into a product that might not exist, with the only source of income being money from new investors.”
The investigation into HyperVerse also brought to light doubts about the existence of Steven Reece Lewis, the alleged CEO of the scheme. Lewis, who presented an impressive profile of achievements, remains untraceable, leading to suspicions that he may be a fictitious person. Sam Lee and Ryan Xu, Australian entrepreneurs associated with the now-defunct Blockchain Global, were reported to have promoted HyperVerse.
The revelation of these details has prompted concerns about ASIC’s regulatory strategies and how they will be refined to prevent similar incidents in the future. These concerns are compounded by a recent CertiK report showing that there were 751 security incidents in 2023, resulting in a loss of approximately $1.8 billion in digital assets.