US court sentences operatives of crypto scam AirBit Club
The United States District Court for the Southern District of New York has proceeded with sentencing key individuals involved in AirBit Club, a fraudulent cryptocurrency scheme involving a purported mining business and money laundering ring.
On October 3, the court announced the sentencing of three of the five surviving defendants in the AirBit case, including Scott Hughes, Cecilia Millan, and Karina Chairez. Hughes, who allegedly laundered around $18 million in AirBit Club fraud proceeds, was sentenced to 18 months in prison. Millan, a senior-level promoter of AirBit Club, received a five-year prison sentence, while Chairez, another senior-level promoter, was sentenced to one year and one day in prison. All three were also sentenced to supervised release.
U.S. Attorney Damian Williams said: “At the top-tier of promoters, Millan and Chairez for years aggressively solicited investments from and misled hardworking and unsophisticated investors to line their own pockets. Hughes abused his position as an attorney to launder millions in AirBit Club fraud proceeds and to give AirBit Club the false appearance of legality. Pyramid schemes like AirBit Club would not be possible without facilitators like Hughes, Millan, and Chairez.”
The development comes roughly six months after six executives of AirBit Club pleaded guilty to running a $100 million Ponzi scheme. 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.
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.
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.”
