A dual citizen of China and St. Kitts and Nevis has pleaded guilty in a U.S. federal court to his role in a scheme that involved laundering more than $73 million in illicit proceeds obtained through cryptocurrency investment scams.
Daren Li, 41, pleaded guilty to conspiracy to commit money laundering in a Los Angeles federal court on Nov. 12, according to a press release from the U.S. Attorney’s Office for the Central District of California.
“Financial criminals and the money launderers who enable them wreak untold harm, ruining lives in the process,” U.S. Attorney Martin Estrada said in a statement. “Investors should be diligent and on guard against anyone offering quick riches via new, exotic investments. A healthy dose of skepticism could prevent financial ruin down the road.”
‘Pig Butchering’
Prosecutors said Li and Zhang generated their illicit proceeds through the so-called pig butchering scam, which involves scammers building a trusting relationship with victims before persuading them to invest in fraudulent cryptocurrency investments. Scammers then cut off communication with the victims and disappear with their investment money. Criminals involved in this scam routinely use dating apps and social media sites to search for victims.According to a plea agreement filed on Nov. 5, Li and Zhang’s scheme lasted from August 2021 to April this year.
Li admitted that he instructed co-conspirators to open U.S. bank accounts on behalf of shell companies to “conceal or disguise the nature, location, source, ownership, and control” of the fraudulently obtained victim funds, according to the court document.
The funds were then converted to virtual currency, specifically Tether, and distributed to cryptocurrency wallets controlled by Li and his co-conspirators.
Li also admitted that at least $73.6 million in victim funds were directly deposited into bank accounts linked to him and his co-conspirators, the court document said, including at least $58.9 million from U.S. shell companies involved in laundering proceeds from the victims.
“Although Li committed this offense from outside the United States, he was not beyond the reach of the Justice Department,” Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in a statement.
“Today’s plea reflects our ongoing commitment to working with our domestic and international partners to hold accountable anyone responsible for cryptocurrency investment fraud against U.S. victims—wherever the perpetrators are located.”
Li is scheduled for a sentencing hearing on March 3, 2025. He faces a maximum sentence of 20 years in federal prison.
FBI Warning
In September, the FBI Baltimore Press Office issued a press release warning that “pig butchering” has impacted hundreds of Marylanders every year.In 2023, 668 Marylanders reported losing $69.1 million in cryptocurrency investment scams to the FBI’s Crime Complaint Center, according to the release. And for the first eight months of this year, 482 Marylanders reported losing nearly $54.5 million.
The office offered tips to avoid cryptocurrency investment fraud, such as being wary of any get-rich-quick schemes and verifying the legitimacy of investment opportunities from strangers or long-lost connections on social media.
If enacted, the legislation would enable state and local law enforcement to use eligible federal grants to investigate financial fraud and pig butchering scams targeting retirees, according to a Sept. 9 press release. Additionally, federal law enforcement would support local law enforcement by using tracing tools for blockchain technology.
“Just last year, the Iowa Attorney General’s office received more than 13,000 financial fraud reports resulting in approximately $42.6 million in financial losses,” Nunn said in a statement at the time.
“Iowa retirees shouldn’t have to worry about fraudsters. And if they are scammed, law enforcement should have the tools needed to bring their case to justice.”
