United States authorities have announced the unsealing of an indictment against five people for their roles in an international digital currency mining and trading Ponzi scheme. The five are alleged to have operated AirBit Club, a scam that allegedly defrauded its investors of over $20 million.
The five—Pablo Rodriguez, Cecilia Millan, Gutemberg Dos Santos, Scott Hughes and Jackie Aguilar—allegedly orchestrated a coordinated scheme in which they promised guaranteed profits to their victims.
According to the indictment unsealed at the Southern District of New York, the scam stretches back to 2015 when Rodriguez and Dos Santos founded AirBit Club. They then recruited Millan and Aguilar as promoters to market the scam globally. Hughes, an attorney licensed in California, aided the scammers by laundering their proceeds through a trust account he set up for his law practice.
The group promised investors that they would earn passive guaranteed profits if they purchased a membership into the club. The profits were purportedly generated through trading and mining of digital currencies by AirBit Club. Investors were given access to an online portal on which they saw their investments yield massive profits.
Instead, the group channeled the investors’ funds into cars, jewelry and luxury homes. They also used some of the proceeds to fund extravagant experiences to recruit even more victims.
The DoJ further revealed that the group always made up excuses whenever the investors attempted to withdraw their funds. In some instances, they claimed that they would charge 50% in fees for withdrawals to discourage the investors from claiming their money. They also demanded that the investors “bring new blood” into the scheme if they wanted to access their funds.
When the COVID-19 pandemic struck, they put up a notice on their online portal claiming that the clients’ accounts had been closed and investment lost due to “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).”
The group has managed to conceal its activities by requesting cash payments from investors, the DoJ claimed. Additionally, they used third-party digital currency brokers and laundered the proceeds through several domestic and foreign bank accounts.
In total, the group allegedly laundered at least $20 million.
The alleged scammers were charged with conspiracy to commit wire fraud, conspiracy to commit bank fraud and conspiracy to commit money laundering. If convicted of money laundering or wire fraud, they face a maximum of 20 years in prison. The bank fraud conspiracy charge carries a maximum term of 20 years in prison.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.