Two Chinese nationals are accused of running a crypto investment scam that used dozens of shell companies to launder at least $73 million from unsuspecting victims, the US Department of Justice (DoJ) announced Friday.
One of the men, 38-year-old Yicheng Zhang, was arrested in Los Angeles following an indictment that was unsealed in California’s Central District court on Thursday.
The other suspect, Daren Li, a 42-year-old dual citizen of China and St. Kitts and Nevis, was arrested at Atlanta’s Hartsfield-Jackson International Airport back in April.
“Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” said US Deputy Attorney General Lisa Monaco.
Authorities say the two were involved in a type of crypto fraud known as "pig butchering." This booming global industry involves scammers establishing trust with victims and luring them to contribute increasingly more funds to a "fake" investment over time.
Eventually, the criminals completely wipe out the victim’s accounts, leaving them with nothing.
“While fraud in the crypto markets takes on many forms and hides in many far-off places, its perpetrators aren’t beyond the law’s reach," Monaco said.
International money laundering scam
Accused of orchestrating an international crime syndicate, the two suspects would first have co-conspirators set up US bank accounts under fake company names.
Victims were then tricked into depositing money into the shell accounts, which were then laundered through US financial institutions and finally sent to off-shore bank accounts in the Bahamas.
There the stolen money was converted into Tether (USDT), a cryptocurrency stablecoin tied to the US dollar, and transferred into several cryptocurrency wallets, with one under management by Li.
According to the DoJ, one of those cryptocurrency wallets was said to have received more than $341 million in virtual assets.
“Money laundering is critical to the success of these scams, allowing fraudsters to quickly move illicit proceeds and try to make them appear legitimate, said Principal Deputy Assistant Attorney General NicoleArgentieri, head of the Justice Department’s Criminal Division.
Communications between the suspects revealed "extensive coordination to facilitate the international money laundering, including chats discussing the commission structure for the network, various shell companies used, victim information, and at least one video from a conspirator calling a US financial institution," authorities said.
Zhang and Li are both charged with conspiracy to commit money laundering and six counts of international money laundering. If found guilty, they could each face up to 20 years in prison for each charge, according to the Justice Department.
The DoJ says that in 2023, more than $1.1 billion in fraudulent funds were recovered by the US Secret Service, with 2024 expected to exceed that amount.
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