The hype around blockchain technology is turning the decentralized finance (DeFi) sector into the next digital gold rush. But the rise of crypto-based Ponzi schemes – which have already wiped off millions of dollars from the market this year – has kept traders and regulators on edge.
Another case of a crypto Ponzi scheme has come to light in the US, with scammers making off at least $100 million from people who invested in AirBit Club. On paper, AirBit Club is a crypto mining and trading company. But in reality, it’s a crypto Ponzi scheme.
On Tuesday, a U.S. District Judge sentenced three people for allegedly orchestrating the AirBit Club Ponzi scheme. According to a press release by the U.S. Attorney’s Office for the Southern District of New York, Attorney Scott Hughes, who is accused of siphoning off nearly $18 million in AirBit Club fraud proceeds, was sentenced to 18-month imprisonment.
Meanwhile, Cecilia Millan, a senior promoter of AirBit Club, was awarded a five-year jail term, and Karina Chairez, another senior level promoter at the company, was sentenced to a year and one day in jail.
“Pyramid schemes like AirBit Club would not be possible without facilitators like Hughes, Millan, and Chairez. Today’s sentences send a message that anyone who facilitates cryptocurrency investment schemes — not only those at the very top of the pyramid — will face serious consequences for such crimes.”
U.S. Attorney Damian Williams
The ruling comes a week after co-founders of AirBit Club – Pablo Renato Rodriguez and Gutemberg Dos Santos – were sentenced to 12 years in jail. Prosecutors allege that these five individuals tricked people into investing in AirBit Club with false promises of profits in exchange for investments in club “memberships.”
AirBit Club reportedly promised its investors that they could “earn passive, guaranteed daily returns on any membership purchases.” However, officials said the company did not participate in any Bitcoin mining or trading activity, and spent the hard-earned money of investors on cars, luxury homes and “more extravagant expos” to claim more victims.
This shocking case comes at a time when the confidence of crypto traders is already shaken—owing to a surge in crypto Ponzi schemes in the US. As Todayq News earlier reported, the tight-knit Tongan community in California was recently hit by a fraudulent crypto scheme. More than 100 people fell victim to the scam, with their losses amounting to about $12 million.
The infamous OneCoin crypto fraud also made headlines last month after a lawyer accused of laundering $400 million was denied bail. In August, the Odisha police busted a multi-million-dollar crypto Ponzi scheme which was operating under the guise of a green energy firm.
The rise of crypto Ponzi schemes, coupled with other deceptive practices by crypto firms, has created a trust deficit in the Web3 sector. This, in turn, has led to authorities around the globe cracking down on the crypto industry.
While regulatory bodies across the world are actively taking steps to curb fraudulent crypto schemes, it’s important for traders to conduct due diligence and exercise caution before investing their hard-earned money in a company even if it seems trustworthy.
The post Five AirBit Club execs sentenced to prison for their roles in Crypto Ponzi scheme appeared first on Todayq News.