US authorities today unsealed charges against what it alleges a fraudulent involving a purported mining business and a money laundering ring. The regulators assert that AirBit Club has been selling illegal investment schemes as well as claiming passive, guaranteed daily returns that cannot be verified.
Participants of the scheme could also receive commissions by directly referring people who purchased the packages, and if their referred participants brought in other people in turn.
The DoJ named defendants in this case as Pablo Renato Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan, And Jackie Aguilar. The compliant identified dos Santos and Rodriguez as founders of AirBit Club. The pair are serial scammers that were fined $1.4 million three years ago for running another Ponzi scheme called “Vizinova.”
Scott Hughes, an attorney licensed to practice law in California, has also been charged with the same offence for promoting the scheme. He faces an additional charge for incorporating a company to promote the scam and helping to remove negative information about AirBit Club and Vizinova from the internet.
On top of these charges, prosecutors accused AirBit Club of deploying elaborate tactics to lure victims with promises of large returns on their investments in computing power to .
AirBit Club solicited investors to subscribe to their packages on the promise of returns paid for up to three hundred days. The money invested was allegedly used to pay for cryptocurrency mining equipment/software and its affiliates.
In its business model, a user signs for an AirBit Club account and buys a subscription or membership plan in cash, with each package has a different cycle, volume, and estimated profit.
Too good to be true
As originally introduced, investors in AirBit mining operations would reportedly earn more than 100% on their initial investment, although, in fact, anyone who took this risk could have faced a loss on the investment.
These promising profits were indeed too good to be true and did not factor the ever-increasing Bitcoin mining difficulty. After , to make the scheme play out according to the plan, the bitcoin price would need to more than fourfold this year.
Details shared today by the regulator further highlights the deceptive nature of the mining pool. Not only was it being carried out without licensing, but also investors who tried to withdraw their money were met with excuses, delays, and hidden fees amounting to more than 50% of the requested withdrawal, if they were able to make any withdrawal at all.
AirBit Club also allegedly ceased paying out investors and closed accounts of some clients when they attempted to withdraw some profits, citing “economic and financial crisis caused by (Covid-19).”
While they rewarded investors for recruiting new participants, the regulator describes these entities as fledgling companies with little to no actual business operations and few prospects for profitable operations. Specifically, the company operates an affiliate program that pays commissions from the deposits of new investors.
“In one instance, AGUILAR told one Victim of the AirBit Club Scheme who was complaining about her inability to withdraw AirBit Club returns that she should “bring new blood” into the AirBit Club Scheme in order to receive her returns,” the DoJ said.
AirBit Club has apparently refused to disclose where the mining takes place, what relationships it has to mining pools, or what hardware it uses. In other words, the regulator believes the entire operation could be nothing more than a .
In a related development, the SEC said on its website that Airbit Club was not registered with the regulator nor was it authorized to solicit investments from the public. Court proceedings for that case are ongoing.
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