- The US Securities and Exchange Commission (SEC) have recently filed a suit against two promoters namely Cecilia Millan and Margarita Cabrera.
- The lawsuit was filed alongside a criminal prosecution statement by the US Department of Justice against them.
US Securities and Exchange Commission (SEC) have recently filed a suit against two promoters namely Cecilia Millan and Margarita Cabrera. Both of them did not register under the compliant authority as brokers. The lawsuit was filed alongside a criminal prosecution statement by the US Department of Justice against them. As per the complaint the two promoters were involved through investments in AirBit Club (‘Airbit’).
Cryptocurrency Uses Automated Robots Linked with International Exchange
Airbit is a multi level marketing scheme that mainly attacked Latin X and other similar Spanish speaking communities and ensured them high returns to the users for their investments in the digital asset. The algorithmic cryptocurrency enhanced their marketing strategy using ‘automated robots’ that were linked to international cryptocurrency exchanges. Moreover a recruitment compensation plan was also introduced, in which investors received rewards for attracting other investors to the scheme.
Defendants Promoted the Scheme in Social Media Without Registering
The SEC complaint revealed that through the compensation plan both the defendants raised a large sum of investments. Consequently they became the top investors of the AirBit scheme and received hefty rewards from them for their efforts in bringing together a large investment. The defendants promoted the scheme through their social media handles and even through meetings that were held in person. But throughout the entire promotion they did not register with the SEC. It has been found that both of them posted promotional videos on their YouTube handle which had thousands of followers and they were rewarded by AirBit for their actions.
AirBit is a Classic Pyramid Scheme Where Old Investors are Rewarded
AirBit has been identified as a classic pyramid scheme. In such schemes, the payments or the new investments are consumed by purchasing expensive goods and to repay the old investors. By participating in this scheme not only have the defendants Millan and Cabrera supported the fraud but also violated the broker-dealer registration provisions of section 15 of the Securities Exchange Act of 1934. The SEC has declared that it seeks permanent injunctive relief against both the defendants from infringement of a handful of provisions including broker-dealer registration provisions of the federal securities laws, conduct-based injunctions, disgorgement and prejudgment interest, and civil monetary penalties.