Two Chinese nationals were charged in an alleged cryptocurrency scam that laundered more than $73 million, according to the U.S. Department of Justice (DOJ).
“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.
Scheme
The two defendants alleged to have managed an international syndicate, instructing co-conspirators to open U.S. accounts in the names of dozens of shell companies, according to the DOJ. The companies’ “sole apparent purpose” was to facilitate the laundering of fraud proceeds, the department said.According to the indictment, one of the shell companies was named “SMX Travel,” which had a principal address in Monterey Park, California. Another shell company, “Jimei Trading,” had a principal address in San Gabriel, California.
Once the victims deposited the money into the accounts, the money would be sent to bank accounts in the Bahamas and converted into Tether, a cryptocurrency pegged to the U.S. dollar, and then deposited into virtual assets valets, according to the DOJ. One of the wallets controlled by the defendants received more than $341 million.
“As alleged in the indictment, Li and Zhang helped launder millions of dollars obtained from victims of cryptocurrency investment scams,” Acting Assistant Attorney General Nicole 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 indictment said one of the co-conspirators was a U.S. citizen living in Los Angeles. Another co-conspirator was a citizen of China who lived in many cities in the United States, including Los Angeles, New York, and Miami.
The defendants started their scheme from about August 2021 to April this year.
“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,” the statement reads.
The arrests were made with the assistance of U.S. partners, Ms. Monaco said, which reflected the DOJ’s “ongoing commitment to disrupting the entire cybercrime ecosystem and stopping fraud across all financial markets.”
Mr. Li and Mr. Zhang were charged with conspiracy to commit money laundering and six substantive counts of international money laundering, according to the DOJ. If convicted, they face a maximum sentence of 20 years in prison on each count.
Warning
Last month, Iowa Attorney General Brenna Bird issued a statement warning Iowans of a rise of “pig butchering” scams.“Pig-butchering scams are evil long-cons,” Ms. Bird stated. “Scammers prey on Iowans’ emotions to build trust over time before stealing their savings, ruining relationships, and taking advantage of people when they are at their most vulnerable. We are spreading the word to stop the scam.”
Ms. Bird raised a recent example, a 69-year-old man who was befriended by a scammer posing as a young woman named Delia on Facebook. The woman eventually convinced the man to spend $164,000 through bitcoin for an investment.
