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Two Chinese Nationals Charged for Allegedly Laundering $73 Million Through Pig Butchering Scams

Li and Zhang allegedly instructed co-conspirators in their laundering network to open bank accounts in the names of various shell companies.
PUBLISHED JUN 24, 2024
Cover Image Source: The Justice Department seal is seen on the lectern | Getty Images | Photo by Mark Wilson
Cover Image Source: The Justice Department seal is seen on the lectern | Getty Images | Photo by Mark Wilson

Two Chinese nationals were charged for laundering at least $73 million tied to cryptocurrency investment scams, the Justice Department said on Friday. As per the court documents, Daren Li, 41, and Yicheng  Zhang, 38, were arrested last month for allegedly managing an international syndicate that laundered funds obtained from various crypto scams and “pig butchering” scams which have defrauded millions of Americans across the country.

Daren Li is a dual citizen of China and St. Kitts and Nevis, and a resident of China, Cambodia, and the United Arab Emirates, as per the release. He was arrested on April 12, 2024 at the Hartsfield-Jackson Atlanta International Airport. On the other hand, Yicheng Zhang is a Chinese national and resident of Temple City, California, who was also arrested last month. 

As per court documents, Li and Zhang allegedly instructed co-conspirators in their laundering network to open bank accounts in the names of various shell companies. Funds from pig butchering scams were allegedly transferred to these accounts. In a pig butchering scam, criminals reach out to victims through social engineering tactics and gain their trust over time, only to steal from them later. Victims of such schemes under investigation were fraudulently convinced to transfer millions of dollars to bank accounts opened in the names of dozens of shell companies tied to the launderers. 



 

Once the victims sent funds to the shell companies, the two accused monitored the lower-level co-conspirators who then transferred the fraudulently obtained funds overseas to bank accounts at Deltec Bank in The Bahamas. One such account was operated with the financial assistance of Li, as per the DOJ’s release. After that, the funds were allegedly converted into cryptocurrency and transferred to different virtual-asset wallets to conceal the source, nature, ownership, and control of the funds.

In the investigation, it was found that at least one such wallet was controlled by Li and Zhang who allegedly received funds directly from the victims. An extensive network of communication was also uncovered which contained chats discussing the commission structure for the laundering network, names of the shell companies used, victim information, and a video of a conspirator calling a U.S. financial institution. 

The fraud scheme allegedly involved over $73 million which was laundered through the bank accounts and converted into virtual assets like the USDT, or Tether. Meanwhile, the scale of the operation could be much bigger as the investigation found that one cryptocurrency wallet involved in the scheme received over $341 million in virtual assets.

Representative Image | Unsplash | Photo by Kanchanara
Representative Image | Unsplash | Photo by Kanchanara

The U.S. Secret Service’s Global Investigative Operations Center is investigating the case. Li and Zhang are both charged with conspiracy to commit money laundering and six substantive counts of international money laundering. If convicted, the defendants face a maximum penalty of 20 years in prison on each count.

A rampant scam in the U.S., pig butchering fraud often starts with online interactions via social media or dating applications. Scammers “fatten the pig” (the victims) by enticing them into cryptocurrency investment schemes or simple fund transfers and then make off with the funds.



 

According to a Fortune report, millions fall victim to scams across the world, and in  2023 alone, the world lost about $75 billion to such scams.

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