An indictment was unsealed yesterday in the Central District of California charging two Chinese nationals with alleging that they played a leading role in a scheme to launder the proceeds of cryptocurrency investment scams.
Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, and a resident of China, Cambodia and the United Arab Emirates, was arrested April 12 at Hartsfield-Jackson Atlanta International Airport and subsequently transported to Central District. Of California. Yicheng Zhang, 38, a Chinese national and resident of Temple City, California, was arrested yesterday in Los Angeles.
โCryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,โ said Deputy Attorney General Lisa Monaco. โWhile fraud in cryptocurrency markets takes many forms and hides in many far-flung places, its perpetrators are not beyond the reach of the law. Today we announce the arrest of two foreign nationals accused of leading a scheme to launder funds to the tune of at least $73 million linked to an international crypto investment scam. โThese arrests, made possible by the assistance of our international and U.S. partners, reflect the Department of Justiceโs ongoing commitment to disrupting the entire cybercrime ecosystem and stopping fraud across all financial markets.โ
According to court documents, Li, Zhang and other conspirators allegedly ran an international syndicate that laundered the proceeds of cryptocurrency investment scams, which are also known as "pig butchers." Victims of the investigated schemes were fraudulently induced to transfer millions of dollars to US bank accounts opened in the names of dozens of shell companies whose only apparent purpose was to facilitate the laundering of fraud proceeds. A network of money launderers then facilitated the transfer of those funds to other domestic and international bank accounts and cryptocurrency platforms in a manner designed to conceal the source, nature, ownership and control of the funds. The fraud scheme involved more than $73 million laundered through US financial institutions into bank accounts in the Bahamas and converted into the virtual asset USDT or Tether. A cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets.
โAs alleged in the indictment, Li and Zhang helped launder millions of dollars obtained from victims of cryptocurrency investment scams,โ said Principal Deputy Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division. โMoney laundering is critical to the success of these scams, as it allows fraudsters to quickly move illicit profits and attempt to make them appear legitimate. โThe arrests announced today demonstrate the Criminal Divisionโs commitment to dismantling the sophisticated financial networks on which these scams depend and holding those involved accountable, no matter where they are located.โ
โSophisticated financial scams like these are a dangerous threat to the financial well-being of all Americans,โ said U.S. Attorney for the Central District of California, Martin Estrada. โWhile my office will continue to root out and punish these deceptive schemes, I encourage everyone to educate themselves about pig slaughter and other types of financial fraud to protect their families from such predatory activity. Vigilance is key.โ
Li and Zhang allegedly ordered accomplices in the money laundering ring to open bank accounts in the names of several shell companies. Once the victims sent funds to the shell companies, Li and Zhang monitored lower-level accomplices who transferred the profits overseas to bank accounts at Deltec Bank in The Bahamas. One of the Deltec Bank accounts was operated with Li's financial assistance. The funds were then allegedly converted into cryptocurrency and sent to virtual asset wallets, including at least one controlled by Li. Zhang also allegedly directly received funds from victims. The communications revealed extensive coordination to facilitate international money laundering, including chats about the network's fee structure, several shell companies used, victim information, and at least one video of a conspirator calling a U.S. financial institution.
"Complex financial fraud schemes, such as pig slaughter, present a clear and present threat to America's financial infrastructure, as countless Americans continue to fall victim to this predatory activity," said Deputy Director of Investigation Brian Lambert of the United States Secret Service. . โIn 2023, the Secret Service and our partners recovered more than $1.1 billion in financial fraud and we are on track to surpass that figure this year. โA special thank you to the special agents, support teams and our prosecutorial partners for their exceptional work in bringing this case to justice.โ
Li and Zhang are charged with conspiracy to commit money laundering and six major counts of international money laundering. If convicted, the defendants face a maximum sentence of 20 years in prison for each count.
The US Secret Service's Global Investigative Operations Center is investigating the case. The El Camino Real Financial Crimes Task Force of Homeland Security Investigations, the Customs and Border Protection National Search Center, the Sensitive Investigation Unit and the Fugitive Task Force of the National Drug Administration of the Dominican Republic, the U.S. Marshals Service, the Drug Enforcement Administration (DEA), and the Department of Justice's Office of International Affairs provided assistance.
The Criminal Division's Computer Crimes and Intellectual Property Section (CCIPS) National Cryptocurrency Enforcement Team (NCET) and the U.S. Attorney's Office for the Central District of California are jointly prosecuting the case. CCIPS/NCET Trial Attorney and Assistant U.S. Attorney Maxwell Coll for the Central District of California, CCIPS/NCET Trial Attorney Stefanie Schwartz and Assistant U.S. Attorney Nisha Chandran for the Central District of California are prosecuting the case.
NCET was created to combat the growing illicit use of cryptocurrencies and digital assets. Within the CCIPS, NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and flipping services and cryptocurrency providers. infrastructure. NCET also establishes strategic priorities with respect to digital asset technologies, identifies areas for increased research and processing focus, and leads the Department's efforts to collaborate with domestic and foreign government agencies, as well as the private sector, to investigate and aggressively prosecute crimes involving cryptocurrencies and digital assets.
If you or someone you know is a victim of cryptocurrency investment fraud, report it to IC3.gov. In your complaint, refer to the "PSA on Pig Slaughter." Include as much information as possible in your report, including investment platform names, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Keep copies of all communications with scammers and records of financial transactions.
An accusation is simply an accusation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
