Two Chinese nationals were charged with orchestrating a large-scale cryptocurrency scam that netted at least $73 million in laundered funds, the U.S. Department of Justice announced on Friday.
According to the DOJ, Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport. Yicheng Zhang, 38, a resident of Temple City, California, was arrested in Los Angeles on Thursday.
The pair are charged with committing money laundering and six counts of international money laundering.
“Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” Deputy Attorney General Lisa Monaco said in a statement. “While fraud in the crypto markets takes on many forms and hides in many far-off places, its perpetrators aren’t beyond the law’s reach.
Li and Zhang are accused of instructing unnamed co-conspirators in opening bank accounts in the name of shell companies, running an international syndicate laundering money from cryptocurrency investment scams known as "pig butchering.”
Pig butchering scams are a type of long-term investment fraud that involves scammers luring victims into cryptocurrency schemes. The DOJ said victims were tricked into transferring millions to U.S. bank accounts of shell companies set up by Li and other conspirators.
Funds deposited into the accounts would be sent to off-shore accounts in the Bahamas and converted into Tether (USDT) and deposited into wallets allegedly controlled by Li. Zhang allegedly also received victim funds, the DOJ said.
While the pair is charged with laundering $73 million, the DOJ said over $341 million worth of “virtual assets” was received by a wallet connected to the duo.
“As alleged in the indictment, Li and Zhang helped launder millions of dollars obtained from victims of cryptocurrency investment scams,” Principal Deputy Assistant Attorney General Nicole M. Argentieri said in a statement. “Money laundering is critical to the success of these scams, allowing fraudsters to quickly move illicit proceeds and try to make them appear legitimate."
The arrests were made through a collaboration between U.S-based and international law enforcement, reflecting the agency’s “ongoing commitment to disrupting the entire cybercrime ecosystem and stopping fraud across all financial markets.” If convicted, Li and Zhang face a maximum sentence of 20 years in federal prison.
Since the collapse of FTX in November 2022, the U.S. Department of Justice and policymakers have stepped up investigations and prosecution of cryptocurrency-related crimes.
In January, the DOJ charged an Australian and two Americans with running a $1.9 billion cryptocurrency scam based around a purported DeFi platform, HyperFund.
And in April, U.S. Senator Elizabeth Warren—a longtime crypto critic—called on the Departments of Homeland Security and Justice to report on the use of cryptocurrency in facilitating the spread of Child Sexual Abuse Material (CSAM), calling it the payment of choice for that market.
In the most prominent criminal case related to cryptocurrency since Sam Bankman-Fried was sentenced to 25 years in federal prison in March, Binance founder and former CEO Changpeng 'CZ' Zhao was sentenced to four months in federal prison after being convicted of money laundering violations in April.
Edited by Andrew Hayward