An Acting US Attorney has announced the extradition of a key member of a cryptocurrency investment scam. Gutenberg Dos Santos was involved in the AirBit Club scam that’s thought to have generated in excess of $20 million.
The AirBit cryptocurrency Ponzi scheme promised its victims unbelievable rates of return on investments. Those duped believed they would receive shares of profits from digital asset mining and trading activity that turned out to be entirely fraudulent.
Cryptocurrency Scammers Await Trial in US Custody
Dos Santos was arrested for his involvement in the scheme on Aug. 18, 2020, in Panama. According to a filing by the US Attorney’s Office for the Southern District of New York on Monday, the Brazilian and U.S. citizen was extradited on Nov. 25.
Pablo Renato Rodriguez, Scott Hughes, Cecilia Millan, and Jackie Aguilar, also involved in the AirBit Club scheme, were taken into custody in the U.S. on Aug. 18. Later, authorities arrested another member of the group, Karina Chairez, on Oct. 20.
The arrests were part of a coordinated effort by special agents from Homeland Security Investigations’ El Dorado Task Force, HSI Panama, the HSI Panama City Transnational Criminal Investigative Unit, and HSI New Orleans.
The AirBit Club scam was active since early 2015. The filing credits Rodriguez and Dos Santos as its founders. Meanwhile, Millan, Chairez, and Aguilar promoted the scheme.
Hughes, a licensed attorney, had previously represented the AirBit Club founders in a separate case. He would later aid the scheme by removing negative reviews about it from the internet.
According to Monday’s filing, Dos Santos stands charged with one count of conspiracy to commit bank and wire fraud, as well as one count for conspiracy to commit money laundering. The charges each carry a maximum sentence of between 20 and 30 years in prison.
AirBit Scammers Splashed Cash on Recruitment and Luxury Items
The filing details that those behind the AirBit Ponzi spent some of the proceeds on cars, jewelry, and extravagant property. They also reinvested cash in the scheme by throwing lavish events intended to recruit new victims.
Victims that requested withdrawals of apparent profits over the years were given excuses that cited supposed delays. Those that were paid out using newcomers’ money were often charged fees amounting to as much as 50% of their expected profits. One victim was told in April 2020 that the Coronavirus-induced financial crisis had meant that AirBit had to close his account without warning.
Those involved attempted to cover up the origin of the scheme’s proceeds by insisting on cash payments or the use of third-party cryptocurrency brokers. They also laundered money through numerous domestic and foreign bank accounts.
Hughes himself managed one of the accounts used. The so-called “Hughes Trust Account” was supposed to be that of the attorney’s legal practice.
However, the group used it to direct victims’ money to members of the group. In total, the filing estimates that the group laundered at least $20 million through the various methods used.