This text was produced in collaboration with Court Watch, an unbiased outlet that finds neglected court docket data.
The dream of constructing a fast and straightforward fortune in cryptocurrency took one more hit on Friday with the arrest of Rodney Burton, a.okay.a. “Bitcoin Rodney,” a relentless promoter who offered himself as a high-tech monetary guru and was typically seen out with superstar buddies together with Jamie Foxx, Rick Ross, Marlon Wayans, and Tiffany Haddish.
Burton, whose 2021 “Reinvent Your self With Crypto” occasion in Miami additionally included appearances by singer Akon, FUBU founder and Shark Tank common Daymond John, and convicted fraudster Jordan Belfort (whose memoir The Wolf of Wall Avenue impressed the Martin Scorsese film), was taken into custody in Florida and is awaiting switch to Maryland, the place he’s being charged. The felony criticism that was filed rests on an affidavit by a particular agent of the IRS who discovered possible trigger to imagine that one of many crypto operations that Burton was concerned in was an “unlicensed cash transmitting enterprise.” Burton is accused, in brief, of unlawful switch of forex — however the broader accusations within the authorized submitting paint an image of a pyramid scheme operated by a number of folks, together with Burton. (Burton didn’t reply to requests for remark via social media or his public defender.)
The assertion describes Burton’s position in advising folks to spend money on HyperVerse (beforehand known as “Hyperfund”), a purported decentralized finance crypto funding platform established in 2020, alongside two different HyperVerse promoters unnamed within the doc (“Particular person 1” and “Particular person 2”). The IRS particular agent alleges that this entity made “fraudulent promotional shows to buyers and potential buyers.” Touted because the “world’s most sustainable passive rewards program,” HyperVerse offered investor “memberships” that promised double or triple returns — as much as one-percent every day “rewards,” paid for partially utilizing “large-scale crypto mining operations.” Nevertheless it had no mining functionality, and, in keeping with the charging doc, the buyers “have been paid with funds collected from more moderen buyers.” The fund collapsed in mid-2023, costing customers roughly $1.3 billion. (Final week, a Guardian investigation discovered that its CEO, Steven Reece Lewis, “doesn’t seem to exist,” although HyperVerse’s founders gave no remark for the story.)
Neither Burton nor the Southern District of Florida Federal Public Defender’s Workplace, which is at the moment representing him, responded to requests for remark from Rolling Stone, and no others have been arrested in reference to HyperVerse thus far. The fund was created by Zijing “Ryan” Xu of China and Xue “Sam” Lee of Australia, two different crypto entrepreneurs whose Blockchain World crypto change platform ACX.io imploded in 2019, with collectors nonetheless owed round $50 million. Blockchain World itself collapsed in 2021 and entered voluntary administration.
HyperVerse was run as what varied monetary regulators world wide warned was a potential pyramid scheme, and that’s what appears to be introduced within the charging paperwork: members invested cash that was transformed into “HyperUnits,” or HU, that would then be withdrawn and transformed into Tether, a so-called “stablecoin” that was established in 2014, whose worth is pegged to the U.S. greenback and may simply be transformed to fiat forex. Buyers have been additionally inspired to reinvest what they made and refer new clients for fee charges. In keeping with the charging assertion, Burton, on at the very least a number of events, paid “rewards” to buyers out of his personal HyperVerse account.
In keeping with the IRS investigator who wrote Burton’s charging doc, “starting in at the very least July 2021 HyperFund started blocking buyers’ capability to transform HU to cryptocurrency.” But Burton continued to just accept checks and wire transfers from clients via early 2022, the affidavit states, and took in $5,833,562 in these transactions, though HU was by then successfully nugatory. Burton, the submitting says, additionally instructed Particular person 1 to ask clients for wire transfers or checks with the incorrect memo line “Session/Coaching” to keep away from scrutiny from banks. Moreover, the entities he used to conduct these transactions didn’t register a cash transmitting enterprise with the Monetary Crimes Enforcement Community as required by the U.S. Treasury, per the IRS agent.
After Burton’s preliminary court docket look, the federal government moved to reseal his felony criticism, probably indicating that different defendants are to be charged in reference to HyperVerse.
Burton has reduce a flashy determine within the crypto world, carrying crypto-themed garments and jewellery, shopping for designer cars with Bitcoin, throwing yacht parties, apparently commissioning his personal rap anthem, and incomes shoutouts for his enterprise acumen by the likes of Rick Ross, who in 2022 said Burton was “getting actual cash” in comparison with “fake-rich” crypto hustlers. This excessive life has prolonged to hobnobbing with different celebrities, together with Jamie Foxx and music mogul Breyon Precott. In recent times, the likes of Lindsay Lohan, Jake Paul, Tom Brady, Jimmy Fallon, Soulja Boy, Lil Yachty, Kim Kardashian, and Floyd Mayweather have all confronted lawsuits and SEC charges for his or her roles in selling crypto, in some circumstances allegedly failing to reveal that they have been paid to take action. Most of these fits have already been settled, whereas Kardashian paid an SEC positive of about $1.3 million in 2022. Burton’s most well-known supporters, nevertheless, don’t seem to have instantly endorsed his HyperVerse enterprise.
Along with his consulting companies, funding tutorials, and occasion appearances, Burton’s web site additionally advertises an AI-powered crypto trading platform. But another link plugged on Burton’s Instagram profile redirects to a hashish way of life website known as Cannaglobe. Burton seems to be the title behind the Cannaglobe product “Ryz,” a “sexual enhancer breath refresher” that prices $99.99.
In a November 2021 interview on the favored morning radio present The Breakfast Membership, Burton stated he’d found crypto investing in 2017 and had been keen about it ever since. Requested by host Angela Yee why folks would possibly suspect a crypto alternative of being a “rip-off,” Burton replied that not each funding he’s made has been “on the up and up.”
“A few of these offers I’ve made cash, a few of these offers I failed miserably,” he stated. “It’s the explanation I’m doing so properly now, it’s as a result of I do know precisely what to search for.” He additionally acknowledged that USI Tech, one of many first crypto platforms he promoted, was a Ponzi scheme — it collapsed in April 2018, with tens of millions of dollars vanished — claiming that he didn’t acknowledge it as such as a result of he was nonetheless new to the sector.
“I all the time inform everybody, be sure you have a coach, directions, path earlier than you go there and do it, as a result of you possibly can lose every thing you made, or earned in life, in crypto,” Burton stated.
