Feds Bust $73M Crypto Scam, Nab Two Ring Leaders

United States authorities have apprehended two individuals implicated in orchestrating a substantial money laundering operation. This scheme reportedly involved channeling over $73 million through American financial institutions before converting the funds into Tether (USDT). This information came to light in a recent announcement by the Justice Department.

Daren Li, aged 41, was taken into custody at the airport in Atlanta on April 12. Yicheng Zhang, 38, was detained in Los Angeles the day before on Thursday. An indictment against the two was unsealed that same Thursday in a California court, bringing to light their purported involvement in the money laundering scheme.

The allegations assert that Li, Zhang, and their associates managed a transnational criminal network. This network is accused of laundering millions of dollars derived from ‘pig butchering’ cryptocurrency scams. These scams involve fraudsters gaining their victims’ trust, coercing them into making substantial financial investments, and then vanishing with the money.

The accused allegedly instructed their co-conspirators to set up U.S. bank accounts under the names of shell companies. The victims were manipulated into transferring large sums into these accounts. These accounts were then used to clean the illicit money. As per the Department of Justice, the funds were distributed across various bank accounts both within the U.S. and abroad.

In their statement, the DOJ clarified that the fraudulent scheme funneled more than $73 million through American financial institutions to bank accounts located in the Bahamas, where it was converted into the cryptocurrency USDT. A cryptocurrency wallet involved in the scheme reportedly amassed over $341 million in digital assets.

Li and Zhang now face severe legal consequences, being charged with conspiring to launder money and six counts of international money laundering. Should they be found guilty, they each face a maximum sentence of 20 years imprisonment per count, leading to a potential total of 140 years behind bars.

Deputy Attorney General Lisa Monaco acknowledged the growing challenge posed by cryptocurrency fraud. She emphasized the determination of law enforcement to hold those responsible accountable, despite the complexities associated with such crimes.

‘Pig butchering’ scams have become increasingly profitable for online criminals. In November 2023, the Justice Department seized $9 million from a similar scheme that targeted over 70 U.S. citizens. The rising frequency and severity of these scams have alarmed lawmakers and regulators in recent months.

Regulatory bodies have intensified their efforts to combat crypto scams and associated incidents within the market. This includes proposing new regulations and industry guidelines. While these measures are aimed at protecting investors and maintaining the integrity of digital assets, there are concerns that some regulations might impede the sector’s growth.