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Airbit Club Founders Plead Guilty In $100 Million Ponzi Scheme

Crypto Users Lose Over $1.4 Billion YTD to Crypto Crimes
Crypto Users Lose Over $1.4 Billion YTD to Crypto Crimes

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Various executives of the cryptocurrency mining and trading platform Airbit Club have pleaded guilty to their roles in coordinated fraud and money laundering. According to a press release by the Department of Justice (DOJ) on March 8, the six executives deceived customers into investing in the Airbit Club and defrauded the victims from a collective $100 million.

Some executives who pled guilty include one of the Airbit Club co-founders Pablo Renato Rodriguez who pleaded guilty on Wednesday. The senior Airbit Club promoters, Karina Chairez, Cecilia Millian, and Jackie Aguilar, pleaded guilty on January 31, February 8, and February 22, respectively, before Judge Daniels in the United States. Notably, Scott Hughes, an attorney who helped Rodriguez and Santos launder money, pleaded guilty early this month.

Nonetheless, the DOJ alleges that the platform was a “Ponzi Scheme” designed to use individuals’ money to fill their pockets.

However, the United States Attorney, Damian Williams, has asserted that:

The defendants took advantage of the growing hype around cryptocurrency to defraud unsuspecting victims globally. Some lied that their money was invested in cryptocurrency trading and mining. Instead of doing the crypto trading or mining on behalf of investors, the defendants built a Ponzi Scheme that took the victim’s money to line their own pockets.

The Airbit Club

The founders launched Airbit Club in 2015. The promoters marketed the platform as a multilevel marketing club in the crypto realm. They even traveled around the globe to Latin America, Asia, and Eastern Europe, hosting lavish exposed small community presentations and luring individuals to obtain Airbit Club membership. However, it was all a scam as promoters spitted false promises to victims that they would earn returns on crypto trading and mining. Additionally, they lied to the individuals that they would earn a passive, guaranteed daily return on any membership purchased.

Moreover, the platform induced the victims to buy memberships in cash. The individuals could view the purported returns on membership in an “online portal.” However, the numbers were fake, and they could not withdraw their funds. According to the released statement by the DOJ, the money collected from the victims only benefited the promoters and founders of Airbit Club. Some spent the money on cars, luxury homes, and jewelry. Notably, some “financed more extravagant expos to recruit more victims.”

Previously, Hughes, an attorney licensed to practice law in California, represented the platform’s founders in a SEC investigation linked to another investment scheme called Vizinova. Hughes helped the founders in perpetrating the Airbit Club by facilitating the removal of negative information about the platform and Vizinova from the internet. However, the U.S. attorney, Damian, noted, ” the guilty pleas send a clear message that we are coming after all of those who seek to exploit crypto to commit fraud.”

How did the Founders conceal the victims?

Various victims tried to outline how they got scammed on Airbit Club. In 2016, some victims tried to withdraw their money via the online portal and failed. They tried complaining to the promoters but were slapped with excuses and delays. In one instance, one victim tried to complain about her inability to withdraw Airbit Club returns. However, Aguilar asserted that she should “bring new blood” into the platform to receive the returns.

Nonetheless, another individual was notified that his account was closed and his principal investment was lost. Notably, the promoters sought to hide the Airbit club scheme by requesting victims to purchase memberships in cash. They notably laundered the scheme’s proceeds through domestic and foreign bank accounts, including Hughes Trust Account.

However, all six executives have been charged with money laundering conspiracy, wire fraud conspiracy, and bank fraud conspiracy. On the other hand, Hughes is scheduled to be sentenced on August 9, as Rodriguez is to be sentenced on July 25 this year. They might face up to 70 years in prison as they have not been sentenced yet. As part of their guilty pleas, the defendants have been ordered to forfeit their deceitful gains, including U.S. currency, Bitcoin, and real estate valued at $100M.

Apart from Airbit Club, the SEC has filed an emergency action against Miami-based investment BKCoin and its founder Kevin Kang, for an alleged crypto fraud scheme. The agency revealed that the platform raised over $100M from 55 investors to increase crypto assets. However, it is alleged that BKCoin and Kang used some money to make Ponzi-like payments and personal use.

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