A key promoter of an alleged global $3bn Ponzi scheme claims in newly filed US court documents he was trapped by an “elaborate” fraud orchestrated by Australian Sam Lee, and should be released from custody.

Rodney Burton – known as Bitcoin Rodney – was charged in the US in early 2024 for his alleged part in the HyperVerse scheme, which swept the globe from 2020 and allegedly defrauded investors of US$1.89bn (A$2.9bn at current rates).

Burton’s lavish lifestyle was regularly flaunted in his promotional videos, including his fleet of luxury cars and branded Lamborghini, diamond-encrusted watches and meals of steak and sausages enrobed with real gold.

In a memorandum filed in the district court of Maryland on Monday in support of a motion to challenge Burton’s continued detention, his legal counsel argues that the 55-year-old cryptocurrency promoter acted in good faith when he endorsed HyperFund and HyperVerse.

Schemes run by the HyperTech group operated under various names, including HyperCapital, HyperFund, HyperVerse and HyperNation.

The motion also argues that the Department of Justice should dismiss the case because “President Donald Trump favors civil regulation over criminal prosecution of the digital asset industry”.

Central to Burton’s argument is that he conducted “extraordinary due diligence” before promoting the scheme, including travelling to Hong Kong and Dubai where he met Lee and saw the corporate offices of HyperFund.

“The apparently legitimate corporate infrastructure that Mr Burton relied upon was deliberately created by Sam Lee and others to deceive investors.”

The memorandum included a photograph of Burton with Lee and others in what was claimed to be the Dubai corporate office of HyperFund.

The global reach of HyperVerse was revealed in a Guardian Australia investigation in late 2023 before Lee was charged with conspiracy to commit securities and wire fraud in the US in January 2024. A separate civil complaint brought by the US Securities and Exchange Commission has charged Lee with fraud and with the unregistered sale of securities in breach of the US Securities Act.

Lee’s alleged co-founder, Ryan Xu, was not indicted in the US proceedings, but according to Burton’s motion Xu was HyperFund’s general counsel.

Lee, a former Melbourne-based blockchain entrepreneur dubbed the “crown prince of bitcoin”, moved to Dubai in late December 2021.

In October, Lee filed a defence to the civil charges, arguing the court had no jurisdiction over him and denying all charges.

In a statement to Guardian Australia, Lee said he was “deeply sympathetic” to Burton, saying he was among those “caught up in Biden Era anti-crypto witch hunt”, but called his claims “baseless”.

Lee suggested a similar program to HyperVerse – which was called a “pyramid and Ponzi scheme” in US court documents – would not face regulatory hurdles if pursued now under the Trump administration.

“Rodney is a pioneer that I only had the privilege of meeting once in 2020, and the model he promoted via Hyperfund if done today, will not run into any regulatory hurdles,” Lee said.

Lee said: “I don’t understand how I can be responsible for his ‘deception’ or part of his ‘extensive due diligence’ when I haven’t transacted with him beyond 2020.”

Lee insisted that his involvement in the HyperVerse schemes was “limited to tech provision”.

Burton’s memorandum also points to companies registered in Australia that were allegedly used by Lee and the HyperFund project to convince investors of their legitimacy, arguing these were relied upon to “perpetrate fraud”.

The memorandum says short video endorsements from celebrities such as the Apple co-founder Steve Wozniak, and presentations from a man called Steven Harrison, who was commissioned to pose as a chief executive named Steven Reece Lewis, also formed part of Lee’s alleged deception. There is no suggestion Wozniak or Harrison were aware of any alleged wrongdoing.

“This elaborate deception … demonstrates the sophisticated nature of the fraud that Mr Lee orchestrated and how far he went to deceive investors – including Mr Burton,” the memorandum says.

“In sum, Mr Lee knew of these lies.”

After Guardian Australia’s investigation, the Australian Securities and Investments Commission (Asic) agreed to examine Lee’s previous company Blockchain Global.

Asic secured a travel ban on one of Lee’s fellow directors, Liang “Allan” Guo, but this expired before Asic announced it would sue him, and he left the country.

In October, Asic also secured an interim travel restraint order against Xu, but it is unclear whether he remains in Australia.

Burton’s legal counsel argues he had already served 22 months in pretrial custody, and the court should restore his “traditional right to freedom before conviction”.

The memorandum also points to Donald Trump’s election as president since Burton’s incarceration as a reason for his release, saying Trump “wants to make America the ‘crypto capital of the world’”.

Last month the civil case against Lee was stayed pending the outcome of the criminal proceedings, given the two cases share “common questions of fact” and are likely to rely on similar witnesses.

Lee has not filed a defence in the criminal matter, but has previously denied any responsibility for the HyperVerse scheme.

Burton’s case is listed for trial in March 2026.