The operators of a global cryptocurrency-based Ponzi scheme have been charged with fraud and money laundering following a United States Homeland Security Investigations (HSI) probe.
According to an announcement from the U.S. Department of Justice, four of the five alleged operators of AirBit Club, which allegedly netted tens of millions of dollars from victims, were arrested and due to appear in court on Aug. 18, while the fifth was arrested in Panama and is awaiting extradition to the U.S.
The scheme was launched in late 2015 and sold as a multi-level marketing club in the cryptocurrency industry. The defendants purportedly hosted lavish presentations to encourage investors to part with cash, promising guaranteed daily returns from cryptocurrency mining and trading.
While an online portal for investors did indeed show these “profits” building up, there was in fact no cryptocurrency mining or trading taking place. Instead the monies deposited were spent on luxury goods and real estate, and were allegedly used to finance even more extravagant presentations to lure in more victims.
As early as 2016, club members wishing to withdraw proceeds were met with excuses, delays and hidden fees, and reportedly told that they must recruit new members if they wanted to receive the returns.
The defendants also tried to conceal the scheme and their involvement by requesting membership payments in cash, allegedly laundering at least $20 million of proceeds through various trusts and bank accounts, and removing negative information about the scheme from the internet.
As Cointelegraph reported last month, one member of another early crypto-based Ponzi scheme that netted $722 million pled guilty to counts of wire fraud and selling unregistered securities.
