Six executives of the Ponzi scheme AirBit Club have admitted their guilt in a fraud and money laundering scheme that allegedly bilked victims out of $100 million, according to prosecutors.
On March 8, one of the founders, Pablo Renato Rodriguez, pleaded guilty to charges of wire fraud conspiracy.
AirBit Club Ponzi Scheme Exposed
AirBit Club was a global scam in which promoters organized “lavish expos” and community presentations across the United States, South America, Eastern Europe, and Asia, and enticed victims to invest in “memberships” that were said to generate returns through cryptocurrency mining and trading.
Using an online portal, victims could monitor their “balances,” but the numbers were fictitious and they were unable to withdraw funds.
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
U.S. Attorney Damien Williams stated that the scammers used victim funds to purchase extravagant vehicles, mansions, and jewelry. A portion of the revenues was utilized to fund other expos to attract additional victims.
“Instead of doing any cryptocurrency trading or mining on behalf of investors, the defendants built a Ponzi scheme and took the victims’ money to line their own pockets.”
How Crypto Scammers Profit From Ponzi Schemes
Most crypto Ponzi schemes operate by promising investors high returns on their investments in a cryptocurrency or a trading platform. These promises of high returns are often made through social media, online advertisements, or other digital platforms.
The schemes usually target investors who are not well-versed in the technical details of cryptocurrency, but are eager to invest in this emerging and potentially lucrative market.
Image: Bitcoin Wisdom
The scammers typically claim to have access to advanced trading algorithms or insider information that allows them to generate high profits from cryptocurrency trading. They may also offer referral bonuses or other incentives to encourage investors to bring in new participants, thereby creating a network of investors.
In reality, these schemes are not legitimate investment opportunities, but rather fraudulent operations that rely on the recruitment of new investors to pay returns to earlier investors.
As the pool of new investors dwindles, the scheme collapses, leaving many investors with significant losses.
BTCUSD currently trading at $21,681 on the daily chart | Chart: TradingView.com
In addition to Rodriguez, co-founder Gutemberg Dos Santos pleaded guilty in October 2021 after being extradited to the United States in November 2020 from his native Panama.
Scott Hughes, an attorney who assisted Rodriguez and Dos Santos in money laundering, entered a guilty plea earlier in March.
This year, three promoters also pleaded guilty: Jackie Aguilar, Karina Chairez, and Cecilia Millan
Although none of the accused have yet been sentenced, each could face a maximum of 70 years of prison time.
-Featured image from Finance Magnates
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