2 arrested for allegedly laundering over $73 million in cryptocurrency scams
Two people, including a Los Angeles County resident, were arrested for allegedly laundering over $73 million through cryptocurrency scams.
The suspects were identified as Yicheng Zhang, 38, from Temple City and Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, according to the U.S. Attorney’s Office.
The pair is accused of playing leading roles in managing an international syndicate that laundered money from cryptocurrency investment scams, also known as “pig butchering.”
“Pig-butchering involves scammers establishing trust with a victim before convincing them to invest in a fraudulent cryptocurrency scheme,” federal officials explained. “Often the victim is enticed to make additional payments before realizing they are a victim of fraud. The ‘butchering’ or ‘slaughtering’ occurs once the victim’s assets, or funds, are stolen by the criminal. Perpetrators behind these schemes are often located overseas.”
Victims of Li and Zhang were convinced to transfer millions of dollars into U.S. bank accounts that were opened using the names of shell companies, authorities said. Those companies’ sole purpose was to help launder fraud proceeds.
Once the victims sent money to the shell companies, the pair monitored the lower-level co-conspirators who transferred the funds overseas into bank accounts at Deltec Bank in The Bahamas, court documents said. Funds were also transferred to other domestic and foreign accounts along with cryptocurrency platforms to conceal the money’s original source.
Through this scheme, the duo allegedly laundered over $73 million.
The money was then converted into the cryptocurrency USDT, or Tether and sent to virtual asset wallets. One cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets, investigators said.
“Communications revealed extensive coordination to facilitate the international money laundering, including chats discussing the commission structure for the network, the various
shell companies used, victim information, and at least one video from a conspirator calling a U.S. financial institution,” court documents added.
Both Li and Zhang were charged with conspiracy to commit money laundering and six counts of international money laundering. If convicted, they face up to 20 years in prison on each count.
On May 17, Zhang pleaded not guilty to the charges and remains in federal custody. A detention hearing is scheduled for May 21 and a trial is scheduled for July 9.
Li, who a federal magistrate judge has ordered jailed without bond, is scheduled for arraignment on May 20.
“Sophisticated financial scams such as these are a dangerous threat to the financial wellbeing of all Americans,” said U.S. Attorney Martin Estrada. “While my office will continue to root out and punish these deceitful schemes, I encourage everyone to educate themselves on pig butchering and other kinds of financial fraud to protect their families against such predatory activity. Vigilance is key.”
The case remains under investigation by the U.S. Secret Service’s Global Investigative Operations Center.
Anyone who may be a victim of cryptocurrency investment fraud should report it online at IC3.gov.
Those filing a report should reference “Pig Butchering PSA” and include as much information as possible including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers.
Victims should also keep copies of all communication with scammers along with records of financial transactions.
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