U.S. authorities have charged the organizers of the cryptocurrency-based investment scheme AirBit Club with fraud and money laundering.
According to an announcement by the U.S. Department of Justice (DOJ), the defendants are being charged for,
“their roles in an internationally coordinated fraud and money laundering ring involved in defrauding individuals through investments in AirBit Club.”
Acting United States Attorney Audrey Strauss commented,
“the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed return on phantom investments in cryptocurrencies.”
The announcement identified Pablo Rodriguez and Gutemberg Dos Santos as the leaders of the operation. Rodriguez and Dos Santos appear to be seasoned scam artists. In 2017, although they did not admit to any wrongdoing, the pair were fined $1.4 million for their involvement in another investment scheme called “Vizinova.”
Too Good to be True
Launched in 2015, the AirBit Club offered guaranteed profits in exchange for cash investments in club “memberships.” These profits were supposed to be completely passive and accrue on a daily basis. In truth, this was a fantasy spun by the alleged scammers.
While the online investment portal did show some evidence of these “profits,” no cryptocurrency mining or trading was actually taking place to support them. Instead, investor money was spent on luxury goods and real estate. It was also allegedly used to finance further marketing efforts.
Per the DOJ report,
“these alleged fraudsters pulled out all the stops to sell their scheme to their victims with enticing recruitment events, then shamelessly used proceeds of their scheme to recruit additional victims through even more aggressive and lavish marketing pitches.”
As early as 2016, complaints began to surface from AirBit Club users who complained they couldn’t withdraw their money. These complaints were reportedly met with excuses, delays, and hidden fees. In some cases, the fees were more than 50% of the requested withdrawal.
If allegations are true, AirBit Club is yet another cautionary tale in the illustrious history of crypto scams. As of this writing, the case against its founders is ongoing.