US DOJ Charges Two in $73M Crypto Money Laundering Case

United States authorities have arrested two individuals accused of orchestrating a massive money laundering scheme involving cryptocurrency. 

Daren Li, 41, was apprehended at Atlanta’s airport on April 12, and Yicheng Zhang, 38, was taken into custody in Los Angeles on Thursday. The Justice Department announced their arrests following the unsealing of an indictment in a California court, which outlined the duo’s alleged criminal activities.

The accused masterminds, Li and Zhang, allegedly led a transnational criminal network that laundered over $73 million through U.S. financial institutions. The laundered funds were converted into Tether, a widely used stablecoin, to obscure their origins. The scheme is linked to a notorious type of crypto fraud known as ‘pig butchering,’ where scammers gain victims’ trust, convince them to invest substantial amounts, and then abscond with the money.

Feds bust $73M crypto scam, arrest two masterminds $USDT https://t.co/csA6cHHA6r

— The Coin Detective (@acoindetective) May 18, 2024

Details of the Money Laundering Scheme

According to the indictment, Li, Zhang, and their associates instructed co-conspirators to open U.S. bank accounts under the names of shell companies. These accounts were then used to receive millions of dollars from unsuspecting victims. The money was subsequently funneled through various domestic and international bank accounts to obfuscate its trail further.

The Department of Justice (DOJ) disclosed that the illicit funds were eventually dispersed to accounts in the Bahamas and converted into USDT (Tether). A cryptocurrency wallet associated with the scheme reportedly handled more than $341 million in virtual assets. The DOJ’s announcement emphasized the sophisticated nature of the operation and the challenges in tracking and intercepting such funds.

Daren Li and Yicheng Zhang face serious charges, including conspiring to launder money and six counts of international money laundering. If convicted, each count carries a maximum sentence of 20 years in prison, which could total up to 140 years for each defendant. These stringent penalties reflect the gravity of the offenses and the federal commitment to combating financial crimes involving cryptocurrency.

Deputy Attorney General Lisa Monaco acknowledged the increasing prevalence of cryptocurrency fraud and reiterated the commitment of U.S. authorities to hold perpetrators accountable. She highlighted the challenges posed by the anonymity and complexity of cryptocurrency transactions but affirmed ongoing efforts to enhance detection and enforcement measures.

Impact of Pig Butchering Scams

Pig butchering scams have become a significant concern for law enforcement and regulators. In November 2023, the U.S. Justice Department seized $9 million from a similar scheme that defrauded over 70 U.S. citizens. The growing frequency and sophistication of such scams have prompted heightened vigilance and action from authorities.

Regulatory bodies have intensified efforts to curb crypto-related fraud and protect investors. Proposed regulations and industry guidelines aim to enhance transparency and security within the digital asset market.