Sentenced for Fraud and Money Laundering
The co-founder of AirBit Club, a cryptocurrency pyramid scheme that defrauded investors of over $100 million, has been sentenced to 12 years in prison. This comes after the co-founder, whose name is Rodriguez, pleaded guilty to wire fraud conspiracy charges in March.
Swindling Unsuspecting Investors
According to Damian Williams, the United States Attorney for the Southern District of New York, Rodriguez preyed on unsophisticated investors by falsely promising that their funds would be invested in legitimate cryptocurrency trading and mining operations. However, instead of investing the money, Rodriguez used a complex laundering scheme involving Bitcoin, an attorney trust account, and international front and shell companies to line his own pockets.
Additional Penalties and Forfeiture of Assets
District Court Judge George B. Daniels not only handed down a 12-year prison sentence but also imposed an additional three years of supervised release. Rodriguez was ordered to pay a forfeiture of $65 million and give up his Irvine residence in California, 3,800 Bitcoins (worth $100 million), $900,000 in U.S. dollars seized from his property, and nearly $1 million previously held in escrow for a Gulfstream Jet.
Other Defendants Await Sentencing
The other defendants involved in the AirBit Club scheme, including Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have all pleaded guilty. However, they are still awaiting their sentencing verdicts.
Promising Guaranteed Returns
AirBit Club was launched in 2015 and presented itself as a platform that earned returns on cryptocurrency mining and trading. Prospective investors were led to believe that they would receive passive, guaranteed daily returns on any membership purchased. However, club members who tried to withdraw their profits faced excuses, delays, hidden fees, and were told they had to recruit new members in order to receive their returns.
A Wider Issue
The case of AirBit Club is just one example of the widespread problem of cryptocurrency ponzi and pyramid schemes. In 2022 alone, an astonishing $7.6 billion in funds were lost to such schemes, according to a report by blockchain intelligence firm TRM Labs.
