In a significant development in cryptocurrency fraud, the co-founder of AirBit Club, a notorious cryptocurrency pyramid scheme, has been sentenced to 12 years in prison. The scheme duped investors out of more than $100 million and falsely claimed to be engaged in cryptocurrency mining.
This sentencing marks the culmination of a legal saga that began when the co-founder, whose name is now infamous, pleaded guilty to wire fraud conspiracy charges in a United States District Court almost seven months ago. The United States Attorney for the Southern District of New York, Damian Williams, remarked on the case, emphasizing how Rodriguez had preyed on unsophisticated investors by promising them investments in legitimate cryptocurrency trading and mining operations. Instead, he orchestrated an elaborate money laundering scheme, using Bitcoin, an attorney trust account, and international front companies to siphon off investors’ funds for his gain.
District Court Judge George B. Daniels added an extra layer to the sentence, imposing three years of supervised release following the 12-year prison term. Rodriguez was also ordered to pay a forfeiture of $65 million, along with surrendering assets that include a substantial stash of 3,800 Bitcoins worth $100 million, his California residence, $900,000 in seized U.S. dollars, and nearly $1 million held in escrow for a Gulfstream Jet.
Notably, Rodriguez is not alone in facing legal consequences. Other key figures in the AirBit Club scam, including Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have pleaded guilty and are awaiting their sentencing verdicts.
The AirBit Club, launched in 2015, had promised investors guaranteed daily returns from cryptocurrency mining and trading. However, by 2016, members attempting to withdraw their earnings encountered several obstacles, including excuses, delays, hidden fees, and the requirement to recruit new members for returns.
The Department of Justice (DOJ) stepped in to charge the club’s operators, including Rodriguez, with fraud and money laundering in August 2020 after a thorough investigation by the United States Homeland Security Investigations.
This case sheds light on the pervasive issue of cryptocurrency fraud and pyramid schemes. A report by blockchain intelligence firm TRM Labs revealed that in 2022 alone, a staggering $7.6 billion was lost to such fraudulent schemes. Consequently, it underscores the need for increased vigilance and regulation in cryptocurrency to protect unsuspecting investors from falling victim to these elaborate scams.