Ponzi Scheme on a notepad

AirBit Club founder gets 12 years in prison over $100M ‘crypto’ mining Ponzi scheme

The founder of AirBit Club, a block reward mining Ponzi scheme that raised over $100 million from investors, has been sentenced to 12 years in prison. Pablo Renato Rodriguez was also ordered to forfeit over $165 million in cash and BTC.

Founded in 2015, AirBit Club lured investors with the promise of passive, guaranteed daily returns, purportedly generated from digital asset block reward mining and trading. The memberships were purchased in cash, after which the investors were given access to an online portal through which they could monitor their earnings.

As the U.S. Justice Department revealed, the portal was manipulated by the founders; while the investors saw their ‘profits’ shoot up, no mining or trading was taking place. Instead, the founders channeled the money to purchasing luxury cars, expensive jewelry, lavish homes, and financing extravagant expos and meetups to recruit more victims.

Investors who attempted to withdraw their earnings faced excuses, delays, and fees that, in some cases, amounted to 50% of the requested withdrawal amount. Others had their accounts terminated due to the “execution of financial sustainability reserve, policy #34 of the AirBit Club Terms and Conditions, due to the economic and financial crisis caused by (COVID-19).” This policy didn’t exist when the investors signed up, DoJ says.

Rodriguez was sentenced to 12 years in prison by the District Court for the Southern District of New York. He was further sentenced to three years of supervised release and to pay $65 million in forfeiture.

The 40-year-old Irvine, California resident must also forfeit various items in his possession, including 3800 BTC, worth over $101 million. Other items include a million dollars held in escrow for the purchase of a personal jet, his residence in California, and $900,000 in cash seized from his house.

“Rodriguez is one of many recent examples of individuals exploiting cryptocurrency to commit fraud, and today’s sentence should deter anyone who may be tempted to defraud others with false promises of cryptocurrency investments,” commented U.S. Attorney Damian Williams.

Three other accomplices—Gutemberg Santos, Cecilia Milan, and lawyer Scott Hughes—have pleaded guilty to wire fraud and money laundering conspiracy, carrying a 20-year maximum sentence. Their sentencing is on October 3.

The U.S. DoJ has continued to crack down on ‘crypto’ crime, pursuing the ‘white collar’ scammers like Sam Bankman-FriedAlex Mashinsky, and lesser-known criminals.

In August, it inched closer to the conclusion of the largest-ever digital asset heist after New York couple Ilya Lichtenstein and Heather Morgan pleaded guilty to laundering the $4.5 billion stolen from Bitfinex in 2016.

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