The co-founder of Airbit Club, a cryptocurrency Ponzi scheme that defrauded investors of more than $100 million, has been sentenced to 12 years in prison.
Seven months ago, AirBit Club co-founder Pablo Rodriguez pleaded guilty in March in US District Court to conspiracy to commit transportation fraud.
In a Sept. 26 statement, U.S. Attorney for the Southern District of New York Damian Williams said Rodriguez is "preying" on unsuspecting investors by making false promises that their money would be invested in legitimate mining and trading operations. of cryptocurrencies.
"Instead of investing on behalf of investors, Rodriguez hid the victims' money in a sophisticated money laundering scheme using bitcoin trust accounts from international lawyers and shell companies and used the victims' money to line his own pockets. "
District Court Judge George Daniels placed Rodriguez on three more years of probation, which will run after his 12 years in prison.
The convicted fraudster was ordered to forfeit $65 million and other items, including 3,800 bitcoins (BTC) worth about $100 million, Rodriguez's residence in Irvine, California, $900,000 in US dollars and about $1 in property. Millions previously held in escrow for Gulf Airline.
The other defendants (Dos Santos, Scott Hughes, Cecilia Milan and Corina Chairez) have also pleaded guilty and are awaiting sentencing.
Related: How to tell if a cryptocurrency scheme is a Ponzi scheme
AirBit Club was launched in 2015. Potential investors were told that AirBit Club made a profit from mining and trading cryptocurrencies and that victims would earn passive and guaranteed daily income from purchased memberships.
But in 2016, club members who wanted to withdraw their winnings were met with excuses, delays and hidden fees and were told they would have to recruit new members to repay their winnings.
The club's operators, including Rodriguez, were indicted by the US Department of Justice in August 2020 for fraud and money laundering following an investigation by the US Homeland Security Investigation.
According to a report released on June 28 by blockchain intelligence firm TRM Labs, $7.6 billion was lost to cryptocurrency Ponzi and pyramid schemes in 2022.
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