Cryptocurrency fraud has taken a serious turn as the co-founder of AirBit Club, a well-known cryptocurrency pyramid scheme, received a 12-year prison sentence. The scheme lured investors with false claims of cryptocurrency mining and took away more than $100 million from them.

The co-founder, who is now infamous, admitted to wire fraud conspiracy charges in a United States District Court seven months ago. This led to his sentencing, which was announced by the United States Attorney for the Southern District of New York, Damian Williams. Williams said that Rodriguez exploited naive investors by offering them investments in genuine cryptocurrency trading and mining activities. However, he actually ran a complex money laundering operation, using Bitcoin, an attorney trust account, and foreign front companies to divert investors’ money for his benefit.

The sentence also included three years of supervised release after the 12-year prison term. Additionally, Rodriguez had to forfeit $65 million and give up assets such as 3,800 Bitcoins worth $100 million, his house in California, $900,000 in seized U.S. dollars, and almost $1 million reserved for a Gulfstream Jet.

Rodriguez was not the only one involved in the AirBit Club scam. Other main players, such as Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, also confessed and are waiting for their sentences.

The AirBit Club, which started in 2015, assured investors of guaranteed daily profits from cryptocurrency mining and trading. However, by 2016, members who tried to withdraw their earnings faced many hurdles, such as excuses, delays, hidden fees, and the need to recruit new members for returns. The Department of Justice (DOJ) intervened and charged the club’s operators, including Rodriguez, with fraud and money laundering in August 2020 after a detailed investigation by the United States Homeland Security Investigations.

This case highlights the widespread problem of cryptocurrency fraud and pyramid schemes. According to a report by blockchain intelligence firm TRM Labs, such schemes caused a loss of $7.6 billion in 2022 alone. Therefore, it emphasizes the need for more caution and regulation in cryptocurrency to safeguard unsuspecting investors from these sophisticated scams.