Judge sentences trio for their role in a crypto-related Ponzi mining scheme

Policy • October 3, 2023, 6:33PM EDT

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Quick Take

Three people were sentenced on Tuesday for their roles in conducting a Ponzi scheme that tricked people into investing in a “purported” crypto mining and trading firm called AirBit Club.
Instead the money was spent on cars and luxury goods, prosecutors said.

Three people were sentenced for their roles in conducting a Ponzi scheme that tricked people into investing in a “purported” crypto mining and trading firm called AirBit Club.

Attorney Scott Hughes, who officials said laundered about $18 million in AirBit Club fraud proceeds, was sentenced by a U.S. district judge to 18 months in prison on Tuesday. Cecilia Millan, who was a senior level promoter at the company, was sentenced to five years in prison, and Karina Chairez was sentenced to just under a year, the U.S. Attorney's Office for the Southern District of New York said on Tuesday.

“Pyramid schemes like AirBit Club would not be possible without facilitators like Hughes, Millan, and Chairez,” said U.S. Attorney Damian Williams in a statement. “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.”

Last week co-founders Pablo Renato Rodriguez and Gutemberg Dos Santos were sentenced to 12 years in prison, according to authorities.

The scheme

The five “induced” victims to invest in AirBit Club, falsely promising profits in exchange for investments in club “memberships” and said that AirBit Club earned returns on crypto mining and trading. Investors could then “earn passive, guaranteed daily returns on any membership purchased,” authorities said.

No bitcoin mining or trading on behalf of investors actually happened and instead money was spent on cars, jewelry, luxury homes and “ more extravagant expos to recruit more Victims,” officials said.

About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.