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Crypto: AirBit Club execs have pleaded guilty to fraud in $100 million crypto ‘Ponzi scheme’: DOJ

Seven executives of AirBit Club pleaded guilty to fraud in their roles in a multiyear venture the Department of Justice claims was a crypto 'Ponzi scheme.' Read More...

Several executives of AirBit Club, a so-calledpurported cryptocurrency mining and trading platform, have pleaded guilty in New York for their roles in an international fraud and money laundering scheme, according to a statement from the Department of Justice on Wednesday.

Rather than AirBit offering members access to a club that invested in crypto trading and mining, as promised, the DOJ said the platform was a “Ponzi scheme,” designed to use member money “to line their own pockets.”

“The defendants took advantage of the growing hype around cryptocurrency to con unsuspecting victims around the world out of millions of dollars with false promises that their money was being invested in cryptocurrency trading and mining,” said Damian Williams, U.S. attorney for the Southern District of New York, in the statement.

AirBit Club launched in 2015, and promised investors guaranteed profits in exchange of cash investments, the DOJ said. Pablo Renato Rodriguez, one of the co-founders, pleaded guilty on Wednesday. Another co-founder, Gutemberg Dos Santos pleaded guilty in October 2021, and three promoters involved in the scheme pleaded guilty for their roles earlier this year. Scott Hughes, an attorney who the DOJ claimed helped the co-founders launder money, pleaded guilty earlier this month.

They also were ordered to forfeit proceeds from AirBit Club, including U.S. dollars, cryptocurrency, bitcoin and real estate with a current value of $100 million, according to the DOJ.

“These guilty pleas send a clear message that we are coming after all of those who seek to exploit cryptocurrency to commit fraud,” the DOJ said.   

While victims of the scheme saw “profits” accumulate on their accounts, those representations were false, according to the DOJ statement. No bitcoin BTCUSD, -1.17% mining or trading on behalf of victims was taking place, according to the DOJ.  Instead, the DOJ said the executives spent the money on cars, jewelry, luxury homes, and financed expos to recruit more victims.

Hughes is scheduled to be sentenced on Aug. 9, and Rodriguez is scheduled to be sentenced on July 25.

The executives and the attorney could not be reached for comment.

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