Chinese nationals Daren Li and Yicheng Zhang have been charged in the US for their involvement in a cryptocurrency scam that laundered over $73 million through US financial institutions [3].
Description
The scheme [1] [3] [4] [5] [9], known as “pig butchering,” targeted victims through social media and messaging platforms, convincing them to open bank accounts in the names of shell companies like “SMX Travel” and “Jimei Trading” with addresses in California and deposit money into them. The funds were then dispersed to various domestic and international accounts before being laundered through US financial institutions to Bahamas bank accounts and converted into the stablecoin Tether (USDT) at Deltec Bank. An investigation revealed over $341 million worth of crypto tokens in a wallet linked to the scam [1]. Li and Zhang [1] [2] [3] [5] [6] [7] [8] [9], along with co-conspirators in the US and China [4], coordinated international money laundering activities [1] [3] [4] [5] [6] [7] [8] [9]. They are facing charges of conspiracy to commit money laundering and international money laundering [1] [4] [5] [6] [7] [8] [9], with a potential maximum sentence of 140 years in prison if convicted [3]. The pair used a shell company called CMD Export and Import to transfer cash to Deltec Bank and Trust in the Bahamas [2], where it was converted to USDT before being distributed to money mules through Binance.US or Binance [2]. The duo allegedly led an international syndicate that used cryptocurrency scams to deceive victims into transferring funds to US bank accounts held under shell companies [8]. The laundered funds were then moved through US financial institutions to bank accounts in the Bahamas [8], converted into Tether (USDT) [8], and sent to cryptocurrency wallets controlled by Li [8]. Li and Zhang face charges of conspiracy to commit money laundering and international money laundering [1] [4] [5] [6] [7] [8] [9], with a maximum prison sentence of 20 years for each count [6] [8]. The pig butchering scam [2] [8] [9], commonly used by fraudsters [8], targeted wealthy individuals through messaging apps and social media platforms [8], promising high returns on investments that were never delivered [8]. This case is part of a larger trend of cryptocurrency fraud schemes [8], with recent cases involving illicit schemes earning millions through cryptocurrency investment fraud and a novel crypto heist orchestrated by two brothers who exploited vulnerabilities in the Ethereum blockchain [8].
Conclusion
This case highlights the growing threat of cryptocurrency scams and underscores the need for increased regulation and enforcement efforts to combat such crimes [3]. The Department of Justice aims to crack down on cryptocurrency fraud and restore confidence in the market as efforts to combat fraud and support victims remain a priority for law enforcement agencies [8].
References
[1] https://www.bitdefender.com/blog/hotforsecurity/us-doj-indicts-two-individuals-in-73-million-pig-butchering-scheme/
[2] https://protos.com/another-chinese-money-laundering-scheme-tied-to-deltec-and-tether/
[3] https://blockonomi.com/73m-crypto-pig-butchering-scam-how-fraudsters-laundered-millions-through-u-s-banks/
[4] https://www.theepochtimes.com/us/two-chinese-nationals-face-charge-in-pig-butchering-crypto-scam-5653003
[5] https://www.justice.gov/opa/pr/two-foreign-nationals-arrested-laundering-least-73m-through-shell-companies-tied
[6] https://qz.com/alleged-crypto-scammers-arrested-73-million-pig-butche-1851485647
[7] https://www.infosecurity-magazine.com/news/chinese-indicted-laundering-73m/
[8] https://icaro.icaromediagroup.com/media/news_stories/news/icaro-media-group/chinese-nationals-charged-for-73-million-money-laundering-scam-involving-crypto-investment-fraud/44234040
[9] https://dailyhodl.com/2024/05/19/doj-charges-two-chinese-nationals-for-allegedly-laundering-proceeds-of-73000000-pig-butchering-crypto-scam/
