An indictment was unsealed in the Central District of California on Thursday, May 16, 2024, charging two Chinese nationals alleging they played leading roles in a scheme to launder proceeds from cryptocurrency investment scams.
Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, and a resident of China, Cambodia, and the United Arab Emirates, was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport and subsequently transported to the Central District of California.
Yicheng Zhang, 38, a Chinese national and resident of Temple City, California, was arrested on Thursday in Los Angeles.
“Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” said Deputy Attorney General Lisa Monaco. “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.”
According to court documents, Li, Zhang, and other conspirators allegedly managed an international syndicate that laundered proceeds of cryptocurrency investment scams, which are also known as “pig butchering.”
Victims of the schemes under investigation were fraudulently induced into transferring millions of dollars to U.S. bank accounts opened in the names of dozens of shell companies whose sole apparent purpose was to facilitate the laundering of fraud proceeds.
A network of money launderers then facilitated the transfer of those funds to other domestic and international bank accounts and cryptocurrency platforms in a manner designed to conceal the source, nature, ownership, and control of the funds.
The fraud scheme involved more than $73 million laundered through U.S. financial institutions to bank accounts in The Bahamas, and converted to the virtual asset USDT, or Tether.
A cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets.
“Sophisticated financial scams such as these are a dangerous threat to the financial wellbeing of all Americans,” said U.S. Attorney Martin Estrada for the Central District of California.
Li and Zhang allegedly instructed co-conspirators in the laundering network to open bank accounts in the names of various shell companies.
Once the victims sent funds to the shell companies, Li and Zhang monitored the lower-level co-conspirators who transferred the proceeds overseas to bank accounts at Deltec Bank in The Bahamas.
One of the Deltec Bank accounts was operated with the financial assistance of Li. The funds were then allegedly converted into cryptocurrency and sent to virtual-asset wallets, including at least one controlled by Li.
Zhang allegedly also directly received victim funds. Communications revealed extensive coordination to facilitate the international money laundering, including chats discussing the commission structure for the network, various shell companies used, victim information, and at least one video from a conspirator calling a U.S. financial institution.
Li and Zhang are both charged with conspiracy to commit money laundering and six substantive counts of international money laundering.
If convicted, the defendants face a maximum penalty of 20 years in prison on each count.
