According to the authorities, six officials of the Ponzi scheme AirBit Exchange have accepted their participation in a fraud and embezzlement operation that reportedly defrauded victims out of $100 million. The Ponzi scam AirBit was involved in was known as “AirBit Club.”
On March 8, one of the company’s founders, Pablo Renato Rodriguez, entered (1) a guilty plea to accusations that he was involved in a conspiracy to commit wire fraud.
AirBit Club Ponzi Scheme Revealed
Throughout the United States, South America, Eastern Europe, and Asia, promoters of a scheme known as AirBit Club held “lavish expos” and community presentations to persuade potential victims to invest in “memberships” that were purported to earn income through mining bitcoin and trading. This scheme was part of a global scam.
The victims could check their “balances” through an online portal; however, the numbers displayed were completely fictional, and they could not withdraw any monies.
Operators and attorney of global multi-million-dollar cryptocurrency Ponzi scheme “AirBit Club” plead guiltyhttps://t.co/MT3mM9aqPV
— US Attorney SDNY (@SDNYnews) March 8, 2023
According to statements made by United States Attorney Damien Williams, con artists utilized the money from their victims to buy expensive jewelry, houses, and flashy automobiles. A percentage of the profits was used to fund subsequent expos in order to bring in a greater number of victims.
Williams said:
“Rather than engaging in any kind of cryptocurrency trading and mining on behalf of the investors, the defendants constructed a Ponzi scheme and seized the money from the victims to line their own wallets.”
The Modus Operandi of Cryptocurrency Ponzi Schemes
The majority of crypto-based Ponzi schemes attract investors with the promise of substantial returns on their investments in either a trading platform or a cryptocurrency. These assurances of substantial profits are frequently conveyed through various digital channels such as social media, online marketing, and other websites.
The schemes typically direct their attention to investors who do not have a strong understanding of the technical aspects of cryptocurrencies but are eager to make investments in this developing sector that has the potential to yield significant returns.
Scammers will commonly make the claim that they have access to sophisticated trading algorithms or confidential information that enables them to make significant gains from trading cryptocurrencies. In addition, they might provide referral bonuses or other forms of incentive to motivate existing investors to attract additional members, thereby developing a network of investors.
In fact, these plans are not genuine prospects for financial investment; rather, they are fraudulent businesses that are run on the principle of luring in further investors in order to provide returns to previous investors.
The scam comes crashing down as the number of potential new investors dwindles, leaving many investors holding the bag for huge financial losses.
Get-Rich Gang
In tandem with Rodriguez, the other co-founder, Gutemberg Dos Santos, admitted guilt in October 2021. Dos Santos was deported to the United States from his home country of Panama in November 2020.
At the beginning of March, attorney Scott Hughes entered a guilty plea for his role in assisting Rodriguez and Dos Santos in their efforts to launder money.
This year, three other promoters, Jackie Aguilar, Karina Chairez, and Cecilia Millan, all entered guilty pleas.
Although none of the defendants have been sentenced as of yet, the greatest amount of time that each of them might spend behind bars is seventy years.