DOJ Charges Two Chinese Nationals in $73M Crypto Scam
The United States Justice Department has arrested two Chinese nationals behind a $73 million money laundering scheme. The accused funneled illicit funds via multiple U.S. financial institutions and later converted them to the stablecoin USDT.
Details of the Arrests
The suspects, Daren Li and Yicheng Zhang, have been identified as the main culprits. Li is a dual citizen of China and St. Kitts and Nevis, while Zhang is a Chinese national residing in Temple City, California. The arrests took place on April 12 in Atlanta and May 16 in Los Angeles, respectively.
Scheme Operations
Li and Zhang, along with other accomplices, operated a money laundering network that washed millions of dollars acquired via “pig butchering” crypto scams. These scams typically involve gaining victims’ trust and convincing them to make large investments in fraudulent schemes. Once the funds are transferred, the scammers vanish.
Shell Companies and Bank Accounts
The duo instructed their accomplices to open multiple U.S. bank accounts under the guise of “dozens of shell companies.” Victims were made to transfer millions into these accounts, all monitored by Li and Zhang. The funds were then moved to different domestic and international bank accounts.
Use of USDT and Deltec Bank Involvement
Regulators flagged several accounts at Deltec Bank in The Bahamas, with at least one operated using Li’s finance assistance. The funds were converted to USDT, a popular choice among scammers. According to the DOJ, a cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets.
Legal Consequences
Li and Zhang face six counts of international money laundering and conspiracy to launder money. If found guilty, they could face a maximum sentence of 20 years for each count.
Broader Implications of Pig Butchering Scams
Pig butchering scams have caused substantial financial damage worldwide, with estimates suggesting they have swindled upwards of $75 billion from victims. The Brooklyn District Attorney’s Office recently cracked down on one such scam, and in 2023, the DOJ froze $9 million in USDT stolen from 70 victims.
