Key Points
- Two Chinese nationals were arrested by the U.S. Justice Department for a $73 million money laundering scheme involving cryptocurrencies.
- The accused operated a “pig butchering” scam, converting illicit funds to the stablecoin USDT.
The U.S. Justice Department has apprehended two Chinese citizens implicated in a money laundering operation worth $73 million.
A May 17 announcement revealed that the illicit funds were channeled through various U.S. financial institutions and later converted into the stablecoin USDT.
The Accused
The individuals arrested, Daren Li and Yicheng Zhang, are both nationals of China, with Li also holding citizenship in St. Kitts and Nevis. Zhang is currently residing in Temple City, California.
The pair, along with other accomplices, ran a money laundering network, laundering millions through “pig butchering” cryptocurrency scams.
These scams typically involve the scammers earning the victims’ trust before convincing them to invest large amounts in profitable schemes. Once the victims transfer the funds, the scammers vanish with the money.
The Method
In this case, the duo instructed their accomplices to open numerous U.S. bank accounts under the pretense of “dozens of shell companies”. The group persuaded victims to transfer millions into these accounts, with all activities overseen by Li and Zhang.
After the funds were secured, they were moved to various domestic and international bank accounts.
Several accounts were flagged by regulators as having been opened at Deltec Bank in The Bahamas. It is alleged that Li assisted in the operation of at least one of these accounts.
The funds from these accounts were then converted to USDT, a stablecoin that has gained popularity among scammers in recent years.
The Department of Justice stated, “A cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets.”
Li was arrested at Atlanta’s airport in Georgia on April 12, and Zhang was apprehended in Los Angeles on May 16.
The pair are charged with six counts of international money laundering and conspiracy to launder money. If found guilty, they face a maximum sentence of 20 years for each count.
“Pig butchering” scams are estimated to have defrauded victims worldwide of over $75 billion, according to recent research.
In the previous month, the Brooklyn District Attorney’s Office took action against a similar scam following multiple complaints across the U.S. In 2023, the DOJ froze $9 million in USDT that had been stolen from 70 victims through “pig butchering” scams.
