On Friday, the US Department of Justice (DOJ) announced that it had charged two Chinese nationals with orchestrating a crypto scam.
According to the DOJ, the scam had been carried out on a large scale and the total amount of funds laundered stood at $73 million.
The charges
41-year old Daren Li is a dual citizen of St. Kitts and Nevis and China. He was arrested at Hartsfield-Jackson Atlanta International Airport on April 12th.
Last week in Los Angeles, 38-year old Yicheng Zhang was arrested. He is a resident of Temple City, California. Charges against the pair include six counts of international money laundering.
Lisa Monaco, the Deputy Attorney General, said that crypto investment scams defraud victims through online communications and exploit virtual currency’s borderless nature.
She said that there are different forms of fraud happen in the crypto market and can be hidden, this does not mean that perpetrators are beyond the law.
The two Chinese nationals are accused of instructing their co-conspirators to open bank accounts in the name of shell companies.
These scams are known as ‘pig butchering’, which is a form of international syndicate created to launder money.
The scam
These investment frauds are long-term scams in which victims are lured into crypto schemes.
According to the DOJ, the bank accounts of shell companies that Li and their conspirators had set up received millions from victims.
The funds that were sent to these accounts were then transferred to off-shore accounts in the Bahamas from where they were converted into Tether (USDT).
These were then deposited into wallets that were under the control of Li. The DOJ said that Zhang had also received victim funds.
While the two were charged for laundering $73 million, the DOJ said that another wallet was connected to the duo. It received virtual assets that were valued at $341 million.
The arrests
Nicole M. Argentieri, the Principle Deputy Assistant Attorney General, said that the duo had helped launder millions of dollars they had gotten from crypto investment scams.
These scams cannot operate without money laundering, as fraudsters need to move illicit funds quickly to give an appearance of legitimacy.
International and US-based law enforcement collaborated to make the arrests. The aim is to address the whole cybercrime ecosystem and stop fraud across the financial markets.
If the two individuals are convicted, they will be sentenced to federal prison for a maximum of 20 years.
Since the downfall of FTX in November 2022, policymakers and the US Department of Justice, have begun to pay more attention to crimes related to cryptocurrencies.
Two Americans and an Australian were charged in January by the DOJ for running a scam worth $1.9 billion. It was based around HyperFund, a DeFi platform.
Sam Bankman-Fried’s fraud trial was one of the most prominent cases related to cryptocurrency. He was sentenced in March to 25 years in prison.
Meanwhile, Changpeng Zhao, the co-founder and former CEO of Binance, received a prison sentence of four months.