Two people, including a Los Angeles County resident, have been arrested on suspicion of laundering more than $73 million through cryptocurrency fraud.
The suspects were identified as Yicheng Zhang, 38, of Temple City, and Darren Li, 41, a dual citizen of China and St. Kitts and Nevis, according to the U.S. Attorney’s Office.
The two are accused of playing a leading role in managing an international syndicate that laundered money from a cryptocurrency investment scam, also known as “pig butchering.”
“Pig butchering involves a fraudster establishing trust with a victim and then convincing them to invest in a fraudulent cryptocurrency scheme,” federal officials explained. “Victims are often lured into making additional payments before they even realize they are the victim of a scam. “Slaughter” or “slaughter” is when a victim’s assets or funds are used by criminals. Occurs when stolen. The perpetrators behind these schemes are often located overseas. ”
Authorities say Li and Zhang’s victims were persuaded to transfer millions of dollars to U.S. bank accounts opened in the names of shell companies. The sole purpose of these companies was to help launder fraudulent proceeds.
Once the victims sent money to the shell company, the pair supervised a junior co-conspirator who transferred the money overseas to a Deltec Bank account in the Bahamas, according to court documents. To hide the source of the funds, the funds were transferred to other domestic and international accounts as well as cryptocurrency platforms.
Through this scheme, the two allegedly laundered more than $73 million.
The money was then converted into the cryptocurrency USDT (Tether) and sent to a virtual asset wallet. Investigators say one crypto wallet involved in the scheme received more than $341 million in crypto assets.
“The communications revealed extensive arrangements to facilitate international money laundering, including chats discussing the network’s fee structure and various entities.”
“The shell companies used, victim information, and at least one video from a co-conspirator calling a U.S. financial institution,” the court document added.
Mr. Li and Mr. Zhang were both charged with conspiracy to commit money laundering and six counts of international money laundering. If convicted, each charge carries a maximum sentence of 20 years in prison.
On May 17, Zhang pleaded not guilty to the charges and remains in federal custody. A detention hearing is scheduled for May 21st and a trial date is scheduled for July 9th.
Lee, who was sentenced to prison without bail by a federal judge, is scheduled for arraignment on May 20.
“Sophisticated financial fraud like this is a dangerous threat to the economic well-being of all Americans,” said U.S. Attorney Martin Estrada. “While my office will continue to root out and punish these deceptive schemes, we will continue to educate ourselves about pig slaughter and other types of financial fraud to protect families from these predatory practices. I recommend it. Vigilance is the key.”
The case remains under investigation by the U.S. Secret Service’s Global Investigative Operations Center.
Anyone who may have been a victim of a cryptocurrency investment scam should report it online. IC3.gov.
Those filing a report should refer to the Pig Butchering PSA and provide as much information as possible, including the name of the investment platform, cryptocurrency address and transaction hash, bank account information, and the name and contact information of the suspected fraudster. Must be included.
Victims should also keep copies of all communications with the scammer, along with records of their financial transactions.
