$73 Million Crypto Laundering Scheme Unveiled

The U.S. Department of Justice (DOJ) has charged two Chinese nationals, Daren Li and Yicheng Zhang, for their roles in a massive cryptocurrency scam, culminating in at least $73 million in laundered money. This high-profile case highlights the ongoing issues surrounding digital currency fraud and the international efforts to combat these illicit activities.

Daren Li, a 41-year-old dual citizen of China and St. Kitts and Nevis, was apprehended on April 12 at Hartsfield-Jackson Atlanta International Airport. Yicheng Zhang, 38, a resident of Temple City, California, faced arrest in Los Angeles. The charges against them include money laundering and six counts of international money laundering, pointing to a sophisticated criminal network that exploited the digital nature of financial transactions.

The DOJ’s investigation reveals that Li and Zhang orchestrated a complex scheme involving “pig butchering,” a form of long-term investment fraud where victims are gradually lured into sending large sums to scammers. This scam primarily utilized cryptocurrency investments to siphon funds from unsuspecting victims, tricking them into transferring millions into U.S. bank accounts held by shell companies.

These funds were subsequently moved to offshore accounts in the Bahamas, then converted into Tether (USDT), and deposited into wallets believed to be controlled by Li. Zhang is also alleged to have directly received funds from victims, illustrating the extensive network utilized by the perpetrators.

Deputy Attorney General Lisa Monaco emphasized the challenges and the determination in tackling such frauds, stating, “Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims… its perpetrators aren’t beyond the law’s reach.”

The DOJ noted that, while $73 million was laundered, the suspects are linked to wallets that received over $341 million in virtual assets, underscoring the vast scale of this operation. This case is a part of broader efforts by U.S. authorities to address the surge in cryptocurrency-related crimes following high-profile incidents like the collapse of FTX.

Nicole M. Argentieri, Principal Deputy Assistant Attorney General, highlighted the critical role of money laundering in these schemes, facilitating the movement and apparent legitimization of illicit proceeds. The successful arrests and charges were made possible through cooperation between U.S.-based and international law enforcement agencies, reflecting a commitment to disrupting cybercrime and securing the financial markets.

If convicted, Li and Zhang could face up to 20 years in federal prison, marking a significant potential penalty for their alleged involvement in these extensive financial crimes.