A Crypto Ponzi Scheme Worth $100 Million Was Perpetrated AirBit Club Executives

The DOJ claims that the founders of the scheme promised members investment in crypto trading and mining, but instead spent the money on cars, jewelry, and luxury homes instead

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In a statement released by the Department of Justice on Wednesday, it was revealed that several executives of AirBit Club, a so-called purported platform for cryptocurrency mining and trading, have pleaded guilty in New York for their roles in a fraud and money laundering scheme working on an international scale.

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In contrast to the promises made by AirBit that members would be able to participate in an investment club that invested in crypto trading and mining, the DOJ said the platform was a Ponzi scheme, designed to use members' money for “lining their own pockets.”

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“This criminal act occurred while the defendants were taking advantage of the growing hype surrounding cryptocurrency to con unsuspecting victims around the world out of millions of dollars by making false promises that their money was going to be invested in crypto-trading and mining,” U.S. attorney Damian Williams, U.S. Attorney for the Southern District of New York, stated in his statement.

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AirBit Club was launched in 2015, and it promised investors a guaranteed profit in exchange for cash investments, the DOJ said. Pablo Renato Rodriguez, one of the co-founders of the company, pleaded guilty to the charges on Wednesday. Gutemberg Dos Santos, another co-founder, pleaded guilty to the charges in October 2021, and earlier this year, three promoters who took part in the scheme also pleaded guilty to their roles in the scheme. Earlier this month, Scott Hughes, an attorney the DOJ claims helped the co-founders launder money, pleaded guilty to helping them launder money.

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There was also an order from the DOJ ordering the defendants to forfeit proceeds from AirBit Club, including U.S. dollars, cryptocurrency, bitcoin, and real estate with a current value of $100 million, as well as proceeds from AirBit Club.

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“With these guilty pleas, the DOJ sends a clear message that it will be taking action against all those who aim to exploit cryptocurrency in order to commit fraud,” it said in a statement.   

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According to the DOJ statement, despite the fact that victims of the scheme may have seen “profits” accumulate in their accounts, those representations were false, as the DOJ stated. According to the DOJ, bitcoin mining or trading by victims on behalf of Bitcoin BTCUSD, -1.47% was not taking place on their behalf.  Rather, the Justice Department claimed that the executives spent the money on cars, jewelry, luxury homes, and sponsored expos to recruit more victims as a result of the fraud.

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The sentencing of Hughes will take place on Aug. 9, while that of Rodriguez will take place on July 25.