Fed uncovers $73 million cryptocurrency scam, arrests two ringleaders
U.S. authorities have arrested two individuals accused of leading a money laundering scheme that funneled more than $73 million through U.S. financial institutions and ultimately converted the funds into Tether (USDT).
The Justice Department announced Friday that Darren Li, 41, was arrested at the Atlanta airport on April 12, and Yicheng Zhang, 38, was taken into custody Thursday in Los Angeles. The indictment charging the two men was unsealed in a California court Thursday, revealing their roles in the scheme.
Li, Zhang and their associates reportedly ran a transnational criminal network that laundered millions of dollars in ‘pig slaughter’ cryptocurrency scams, where fraudsters would gain victims’ trust and persuade them to invest large sums, then disappear with the funds.
The defendants reportedly instructed their conspirators to open U.S. bank accounts in the name of a shell company. Scammers convinced victims to transfer millions of dollars to U.S. bank accounts, which were then used to launder illegal funds.
According to the Ministry of Justice, the funds were later distributed to various domestic and foreign bank accounts. The DOJ said:
“The fraud scheme involved laundering more than $73 million through U.S. financial institutions into bank accounts in the Bahamas and converting it to the virtual assets USDT or Tether. Cryptocurrency wallets involved in this scheme received over $341 million in virtual assets.”
Daren Li and Yicheng Zhang were charged with conspiracy to commit money laundering and six counts of international money laundering. If convicted, he could face up to 20 years in prison on each count, potentially up to 140 years in prison.
Related: Tether freezes $5.2 million USDT linked to phishing scam
In a statement, Deputy Attorney General Lisa Monaco acknowledged the challenges posed by cryptocurrency fraud but confirmed her commitment to holding perpetrators accountable.
Pig slaughter scams are lucrative for online criminals. In November 2023, the U.S. Department of Justice seized $9 million from a scheme targeting more than 70 U.S. citizens. These types of scams have raised alarm among lawmakers and regulators in recent months as they increase in frequency and severity.
Regulators have been stepping up efforts to curb cryptocurrency fraud and related incidents in the market. This can be found in the proposed regulations and industry guidance issued by the authorities. While efforts to protect investors and preserve digital assets are welcome, some regulations may hinder the sector’s progress.
magazine: U.S. enforcement agencies are stepping up their game against cryptocurrency-related crimes.
