The co-founder of AirBit Club, a cryptocurrency Ponzi scheme responsible for defrauding investors of over $100 million, has been sentenced to 12 years in prison.
Pablo Rodriguez, one of the co-founders of AirBit Club, had pleaded guilty to wire fraud conspiracy charges in March in the US District Court. His sentencing took place seven months after his guilty plea.
US Attorney Damian Williams for the Southern District of New York stated on September 26 that Rodriguez targeted inexperienced investors, luring them in with false promises of legitimate cryptocurrency trading and mining operations. Instead, Rodriguez utilized a complex money laundering scheme, involving Bitcoin, attorney trust accounts, and international front and shell companies, to conceal and personally benefit from the defrauded funds.
In addition to his 12-year prison sentence, Rodriguez will serve three years of supervised release. He has also been ordered to forfeit $65 million and various assets, including approximately 3,800 Bitcoins and $900,000 discovered in Rodriguez's Irvine, California residence. The seized assets are collectively valued at around $100 million. Additionally, nearly $1 million held in escrow for a Gulfstream jet has been included in the forfeiture.
Other individuals involved in the AirBit Club scam, including Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairman, have pleaded guilty as well and are awaiting their sentences.
AirBit Club was launched in 2015 and attracted potential investors by claiming to generate returns through cryptocurrency mining and trading. Victims were promised passive daily returns upon purchasing a membership. However, when members sought to withdraw their earnings in 2016, they encountered excuses, delays, hidden fees, and were informed they needed to recruit new members to access their returns.
In August 2020, the US Department of Justice charged the operators of the club, including Rodriguez, with fraud and money laundering after a probe by US Homeland Security Investigations.
According to a report from blockchain intelligence firm TRM Labs on June 28, cryptocurrency Ponzi and pyramid schemes resulted in losses of $7.6 billion in 2022.
