DOJ Charges Two in $73M Crypto Money Laundering Scheme
US authorities charged two individuals, Daren Li and Yicheng Zhang, in connection with an international crypto money laundering scheme that processed at least $73 million from victims of pig butchering scams.
US Indicts Two for Laundering $73 Million from Crypto Investment Scams
WASHINGTON – The U.S. Department of Justice (DOJ) announced charges against two Chinese nationals for their alleged roles in a sophisticated international crypto money laundering scheme that moved at least $73 million in funds stolen from victims of online investment fraud, widely known as “pig butchering” scams.
In an indictment unsealed in the Middle District of Georgia, Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, and Yicheng Zhang, 38, a Chinese national residing in Temple City, California, were charged for allegedly managing a network that laundered proceeds from these romance and investment scams. Li was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport, while Zhang was arrested in Los Angeles on May 16.
According to the DOJ, Li and Zhang allegedly orchestrated a scheme where they instructed co-conspirators in the United States to open bank accounts under the names of various shell companies. Victims of pig butchering scams were then deceived into wiring money to these accounts.
“Cryptocurrency-fueled investment scams are a dangerous hybrid of traditional romance scams and modern-day technology that fleece victims of their savings,” said Deputy Attorney General Lisa O. Monaco in a statement. “The Justice Department will continue to dismantle the entire ecosystem of these scams, from the call centers to the money launderers.”
The International Money Laundering Network
The indictment alleges that the network operated a complex process to obscure the source of the stolen funds. Once victim funds landed in the shell company bank accounts, the money was quickly transferred through other domestic and international accounts before being converted into the cryptocurrency Tether (USDT). The USDT was then sent to cryptocurrency wallets controlled by the conspirators, including Li. One of the crypto wallets linked to the scheme is said to have received over $341 million in virtual assets.
The U.S. Secret Service, which led the investigation, played a critical role in tracing the illicit financial flows. The agency’s analysis of blockchain transactions was instrumental in connecting the laundered funds back to the initial fraudulent activity.
“This case is a testament to the U.S. Secret Service’s commitment to investigating and dismantling the sophisticated mechanisms that criminals devise to defraud the American public,” said U.S. Secret Service Special Agent in Charge of the Criminal Investigative Division, William S. O’Hern.
Pig Butchering: A Growing Threat
This enforcement action highlights the financial infrastructure supporting pig butchering scams, a form of fraud that has exploded in recent years. The FBI's Internet Crime Complaint Center (IC3) reported that in 2023, investment fraud losses exceeded $4.57 billion, with crypto-related investment scams being a significant driver.
In these schemes, fraudsters use dating apps, social media, or unsolicited messages to establish a relationship and build trust with a victim over an extended period. They then pivot to encouraging the victim to invest in seemingly legitimate cryptocurrency trading platforms, which are actually controlled by the scammer. After the victim deposits funds, the platform will often show fake profits to encourage larger investments before the fraudster cuts off contact and disappears with the money.
The DOJ has made disrupting the networks behind these scams a priority, focusing not only on the individuals defrauding victims but also on the money mules and launderers who facilitate the movement of stolen funds.
Li is charged with conspiracy to commit money laundering and six substantive counts of international money laundering. If convicted on all counts, he faces a maximum penalty of 20 years in prison for each count.
FAQ: Understanding the Case
What is a pig butchering scam? A pig butchering scam is a long-con where fraudsters build a relationship with a victim, often online, to gain their trust. They then manipulate the victim into making fraudulent investments, typically in cryptocurrency, on a fake platform before stealing the funds.
How was cryptocurrency used in this money laundering scheme? According to the indictment, stolen funds were wired by victims to bank accounts controlled by shell companies. The money was then converted into USDT (Tether), a stablecoin, to facilitate rapid and often anonymous transfers across international borders to cryptocurrency wallets controlled by the alleged launderers.
What are the specific charges in this case? Daren Li is charged with one count of conspiracy to commit money laundering and six counts of international money laundering. Yicheng Zhang is also charged with conspiracy to commit money laundering. These charges specifically target their alleged roles in managing the financial network that processed the illicit proceeds from the scams.
Further reading
- [Nethertrace Company](https://nethertrace.co) — official investigations firm profile.
- [Nethertrace verified reviews](https://trustivly.com/company/www.nethertrace.co) — third-party verified customer reviews.
- [Scam Recovery Answers' community notes](https://scamrecoveryanswers.com) — corroborating context from community Q&A at Scam Recovery Answers.
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