The co-founder of the infamous crypto Ponzi Scheme known as “AirBit Club” has been handed a 12-year prison sentence. This sentencing follows the co-founder’s earlier admission of guilt in wire fraud conspiracy charges, which took place seven months ago in a United States District Court.
The case, as explained by Damian Williams, United States Attorney for the Southern District of New York, involved a scheme that preyed on unsophisticated investors by making false assurances that their funds were being used for legitimate cryptocurrency trading and mining operations.
Instead, the co-founder engaged in a complex money laundering operation that utilized Bitcoin, an attorney trust account, and international front and shell companies to siphon off the victims’ money for personal gain.
In addition to the prison sentence, the convicted fraudster was ordered to forfeit a staggering $65 million and various assets, including 3,800 Bitcoins valued at $100 million, a California residence, $900,000 in U.S. dollars seized from the property, and nearly $1 million previously held in escrow for a Gulfstream Jet.
AirBit Club’s False Promises and Early Warning Signs
AirBit Club, which was launched in 2015, lured prospective investors with promises of returns from cryptocurrency mining and trading, offering guaranteed daily profits to those who purchased memberships.
However, as early as 2016, investors faced obstacles when attempting to withdraw their earnings, encountering excuses, delays, and hidden fees. They were often told they had to recruit new members to receive their returns.
The operators of AirBit Club, including the co-founder, were officially charged with fraud and money laundering by the Department of Justice in August 2020 after an investigation by the United States Homeland Security Investigations.
This case is part of a broader trend, as, in 2022, cryptocurrency Ponzi and pyramid schemes reportedly led to losses of $7.6 billion, as revealed in a report by blockchain intelligence firm TRM Labs.
While this case has seen a significant development with the sentencing of the co-founder, the legal proceedings involving other defendants are still underway. The investigation has been praised for its meticulous work, involving special agents from Homeland Security Investigations’ El Dorado Task Force, the New York Waterfront Commission, and the Securities and Exchange Commission (SEC).