US authorities have charged with fraud and money laundering five people operating a Bitcoin mining Ponzi scheme. Called AirBit Club, the scam operated since 2015 and duped numerous victims into investing by promising alluring but false returns.
How Did AirBit Club Operate?
According to the US Department of Justice (DOJ), Pablo Renato Rodriguez and Gutemberg Dos Santos co-founded AirBit Club in late 2015. Cecilia Millan and Jackie Aguilar joined the project later on as promoters, and Scott Hughes served as the company’s lawyer.
Together, the five people operated the multi-level marketing club by persuading victims into joining after promising impressive daily passive returns from Bitcoin mining and trading. Depending on the different memberships purchased by potential investors, their profits could even reach double-digits per day, the false advertisements claimed.
The group traveled throughout the US and numerous countries in Latin America, Asia, and Eastern Europe, where they hosted lavish expos and community presentations to convince victims to invest. After purchasing a membership, the victims received access to an online company portal to view the supposed returns.
“While victims saw “profits” accumulate on their Online Portal, those representations were false: no Bitcoin mining or trading on behalf of victims, in fact, took place. Instead, Rodriguez, Dos Santos, Millan, and Aguilar enriched themselves, and spent victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more victims.” – reads the statement.
Ultimately, the five people behind the Ponzi scheme laundered at least $20 million.
Bitcoin Ponzi Schemes Operators Jailed And Charged
As the AirBit Club didn’t produce any returns, some of the victims reached out to US authorities, which led to the arrests of all five people. HSI Special Agent-in-Charge Peter Fitzhugh said that the perpetrators will be charged for running the multimillion-dollar cryptocurrency Ponzi scheme, money laundering ring, and spending all victims’ funds on luxury homes, cars, and jewelry.
“As alleged, the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed returns on phantom investments in cryptocurrencies.” – said Acting United States Attorney Audrey Strauss.
Rodriguez, Dos Santos, and Millan were charged with single counts of conspiracy to commit wire fraud, conspiracy to commit money laundering, and conspiracy to commit bank fraud. Aguilar received a one-count charge of conspiracy to commit wire fraud, while Hughes – one count of conspiracy to commit money laundering and one count of conspiracy to commit bank fraud.
The wire fraud and money laundering conspiracy charges each carry a maximum term of 20 years in prison and the bank fraud conspiracy – a maximum term of 30 years in prison.
Interestingly, Hughes, an attorney licensed to practice law in California, previously represented Rodriguez and Dos Santos in an SEC investigation regarding another investment scheme dubbed Vizinova.