AirBit Club operatives plead guilty to $100M Ponzi scheme
Six executives of AirBit Club, a fraudulent cryptocurrency scheme involving a purported mining business and money laundering ring, have pleaded guilty to running a $100 million Ponzi scheme and face up to 20 years in prison, prosecutors said.
The DoJ named defendants in this case as Pablo Renato Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan, and Jackie Aguilar. The complaint identified dos Santos and Rodriguez as founders of AirBit Club. The pair are serial scammers that were fined $1.4 million three years ago for running another Ponzi scheme called ‘Vizinova’.
Scott Hughes, an attorney licensed to practice law in California, was also charged with the same offence for promoting the scheme. He faces an additional charge for incorporating a company to promote the scam and helping remove negative information about AirBit Club and Vizinova from the internet.
Senior promoters Cecilia Millan, Karina Charez and Jackie Aguilar pleaded guilty to three counts of wire fraud conspiracy, bank fraud conspiracy, and money laundering conspiracy. They are scheduled to be sentenced on June 28, July 25, and June 27, 2023, respectively.
The DoJ asserts that AirBit Club had been selling illegal investment schemes as well as claiming passive, guaranteed daily returns that cannot be verified. Participants of the scheme also received commissions by directly referring people who purchased the packages, and if their referred participants brought in other people in turn.
U.S. Attorney Damian Williams said: “The defendants took advantage of the growing hype around cryptocurrency to con unsuspecting victims around the world out of millions of dollars with false promises that their money was being invested in cryptocurrency trading and mining. Instead of doing any cryptocurrency trading or mining on behalf of investors, the defendants built a Ponzi scheme and took the victims’ money to line their own pockets. These guilty pleas send a clear message that we are coming after all of those who seek to exploit cryptocurrency to commit fraud.”
On top of these charges, prosecutors accused AirBit Club of deploying elaborate tactics to lure victims with promises of large returns on their investments in computing power to mine cryptocurrencies.
AirBit Club solicited investors to subscribe to their packages on the promise of returns paid for up to three hundred days. The money invested was allegedly used to pay for cryptocurrency mining equipment/software and its affiliates.
In its business model, a user signs for an AirBit Club account and buys a subscription or membership plan in cash. Each package has a different cycle, volume, and estimated profit.
As originally introduced, investors in AirBit mining operations would reportedly earn more than 100% on their initial investment although anyone who took this risk could have faced a loss on the investment.
These promising profits were indeed too good to be true and did not factor in the ever-increasing Bitcoin mining difficulty. As expected, investors who tried to withdraw their money were met with excuses, delays, and hidden fees amounting to more than 50% of the requested withdrawal if they were able to make any withdrawal at all.
AirBit Club allegedly ceased paying out investors and closed accounts of some clients when they attempted to withdraw some profits, citing “economic and financial crisis caused by Covid-19.”
