Two Chinese nationals have been arrested and indicted for their alleged role in a multimillion-dollar investment fraud scheme.
Daren Li, 41, is a dual citizen of China and St. Kitts and Nevis, and a resident of China, Cambodia and the United Arab Emirates. He was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport and taken to the Central District of California. Yicheng Zhang, 38, is a Chinese national and resident of Temple City, California, and was arrested on May 16 in Los Angeles.
They are said to have managed an international gang which laundered $73m from crypto scams known as “pig butchering.”
Li and Zhang allegedly told their co-conspirators in the network to open bank accounts in the names of shell companies. Funds were transferred to bank accounts at Deltec Bank in The Bahamas – one of which was operated with Li’s help, the Department of Justice (DoJ) claimed.
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The money was then converted into cryptocurrency and placed in digital wallets – at least one of which was allegedly managed by Li. Zhang also directly received funds, the DoJ said.
Prosecutors claimed to have communications from the duo proving that they coordinated the network extensively, including monitoring the actions of “low-level” members and discussing the commission structure for the network. The DoJ said it also has at least one video of a conspirator in the group calling a US bank.
Pig butchering is a type of investment fraud that derives its name from a Chinese phrase to signify the modus operandi of fraudsters who slowly “fatten” their victims before going in for the kill.
Victims are usually approached out of the blue, through unsolicited messages or on dating sites, with the scammer attempting to build a rapport to gain their trust. Once this has happened, they’ll suggest the victim invests in a cryptocurrency scheme. However, although the apps they gain access to might show them growing their investment, the funds are in reality diverted to the scammer’s bank account never to be seen again.
The DoJ claimed that Li and Zhang helped to launder more than $73m through US financial institutions to bank accounts in The Bahamas, where it was converted to the virtual asset USDT, or Tether. However, one cryptocurrency wallet involved in the scheme received more than $341m in virtual assets, hinting at a much bigger scope.
Li and Zhang are charged with conspiracy to commit money laundering and six counts of international money laundering. They face a maximum penalty of 20 years behind bars if found guilty.