Co-Founder of AirBit Club Sentenced to 12 Years for Cryptocurrency Ponzi Scheme

Key Takeaways

1. Pablo Renato Rodriguez, co-founder of AirBit Club, sentenced to 12 years in prison.
2. Rodriguez and co-defendants ordered to forfeit approximately $100 million in assets.
3. Co-defendants await sentencing; previous involvement in pyramid schemes revealed.

Background and Conviction

Pablo Renato Rodriguez, co-founder of AirBit Club, was sentenced to 12 years in prison on September 26, 2023, by U.S. District Judge George B. Daniels. The sentencing was announced by Damian Williams, the United States Attorney for the Southern District of New York. Rodriguez was convicted for his role in orchestrating a global pyramid scheme through AirBit Club, a purported cryptocurrency mining and trading company. The co-defendants, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have pled guilty and are awaiting sentencing.

Deceptive Practices

AirBit Club was founded in 2015 by Rodriguez and Dos Santos. They falsely promised investors guaranteed profits in exchange for cash investments in club memberships. The company was marketed as a multilevel marketing club in the cryptocurrency industry. However, no actual Bitcoin mining or trading took place on behalf of the investors. Instead, Rodriguez and his co-conspirators used the money for personal expenses and to finance more recruitment events.

Asset Forfeiture

Rodriguez and his co-defendants have been ordered to forfeit their fraudulent proceeds, which include assets consisting of U.S. currency, Bitcoin, and real estate currently valued at approximately $100 million.

Previous Legal Troubles

Before AirBit Club, Rodriguez and Dos Santos were sued by the Securities and Exchange Commission (SEC) for another pyramid scheme known as Vizinova, and paid $1.7 million in disgorgement and fines.

Upcoming Sentencings

Dos Santos, Millan, Chairez, and Hughes have pled guilty to charges including wire fraud conspiracy, money laundering conspiracy, and bank fraud conspiracy. They are scheduled to be sentenced in early October 2023.

Cryptocurrency Ponzi schemes are not uncommon in a world where regulatory oversight is still catching up. On September 28, 2022, the U.S. Attorney’s Office announced the eighth distribution of over $4 billion to victims of the Madoff Ponzi scheme, which was not cryptocurrency-related but serves as a reminder of the recurring nature of such fraudulent schemes.

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