In a significant development in the world of cryptocurrency fraud, the co-founder of AirBit Club, a notorious Ponzi scheme that duped investors out of more than $100 million, has been handed a 12-year prison sentence. This sentencing comes after seven months of legal proceedings following the guilty plea of AirBit Club’s co-founder, Pablo Rodriguez, for wire fraud conspiracy charges in a United States district court in March.
U.S. Attorney for the Southern District of New York, Damian Williams, released a statement on September 26th, in which he described Rodriguez as someone who “preyed” on unsuspecting investors by making false promises that their funds would be invested in legitimate cryptocurrency trading and mining operations. Instead, Rodriguez employed an intricate money laundering scheme involving Bitcoin, attorney trust accounts, international front companies, and shell corporations, ultimately using investors’ money for personal gain.
District court Judge George Daniels imposed an additional three years of supervised release on Rodriguez following his 12-year prison sentence. Moreover, Rodriguez has been ordered to forfeit $65 million and various assets, including approximately 3,800 Bitcoin, valued at around $100 million, his Irvine residence in California, $900,000 in U.S. dollars seized from the property, and nearly $1 million held in escrow for a Gulfstream jet.
Notably, other individuals involved in the AirBit Club scheme, including Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have also pleaded guilty and are currently awaiting their sentences. AirBit Club, launched in 2015, deceived prospective investors by promising guaranteed daily returns through cryptocurrency mining and trading operations. However, as early as 2016, members faced difficulties withdrawing their funds, encountering excuses, delays, and hidden fees. Some were even told they had to recruit new members to access their returns.
The U.S. Department of Justice charged the club operators, including Rodriguez, with fraud and money laundering in August 2020, following an investigation by U.S. Homeland Security. A recent report by blockchain intelligence firm TRM Labs revealed that in 2022, a staggering $7.6 billion was lost to cryptocurrency Ponzi and pyramid schemes, underscoring the need for continued vigilance and regulation in the crypto space.