US Justice Department Extradites Alleged Co-Founder of Crypto Ponzi Scheme From Panama

The U.S. Department of Justice (DOJ) has extradited the man accused of being one of the co-founders of the global cryptocurrency Ponzi scheme AirBit Club.

The Acting U.S. Attorney for the Southern District of New York, Audrey Strauss, said Monday the accused, Gutemberg Dos Santos, was extradited from Panama last week. Along with co-defendants he has been indicted on charges related to his alleged role in an international fraud and money laundering scheme that defrauding individuals by soliciting investments in an allegedly fake cryptocurrency mining and trading company.

Describing the scheme, Strauss said the company “promised extraordinary rates of return on phantom investments in cryptocurrencies, defrauding victims of tens of millions of dollars.”

According to the indictment, Dos Santos and his co-defendants had been involved in the Ponzi scheme since at least September 2015. Major movements in cryptocurrencies, especially bitcoin (BTC), which on Monday hit an all-time high, provides opportunities for unscrupulous actors to deceive people with promises of consistent and high returns.

Investors, as usual, need to be careful and attentive to such red flags as long delays in processing withdrawals, demand for cash payments and high, hidden fees, all of which often point to fraudulent intentions. In this case, the DOJ said, when one victim tried to withdraw funds from the alleged scheme, she was told to “bring new blood” into AirBit Club in order to receive her returns.

• According to the DOJ announcement, the accused and others allegedly promoted the scheme through asking victims to purchase memberships, payments for which were laundered through domestic and foreign bank accounts.
• Through these memberships, the defendants allegedly laundered at least $20 million.
• Charged with one count each of conspiracy to commit wire fraud, conspiracy to commit bank fraud and conspiracy to commit money laundering, Dos Santos was first arrested in Panama in August and is likely to come before a U.S. Magistrate Judge later on Monday.