Two Foreign Nationals Arrested for Allegedly Laundering At Least $73 Million Through Shell Companies Tied to Cryptocurrency Investment Scams

LOS ANGELES – A grand jury indictment was unsealed today in U.S. District Court charging two Chinese nationals, one of them a San Gabriel Valley resident, alleging they played leading roles in a scheme to launder proceeds from cryptocurrency investment scams.       

Daren Li, 41, a dual citizen of China and St. Kitts and Nevis, and a resident of China, Cambodia, and the United Arab Emirates, was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport and subsequently transported to the Central District of California. Yicheng Zhang, 38, a Chinese national and resident of Temple City, was arrested and arraigned today in Los Angeles.

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.

Zhang pleaded not guilty today to the charges and a July 9 trial date was scheduled. Zhang, who remains in federal custody, has a detention hearing scheduled for May 21. Li, whom a federal magistrate judge has ordered jailed without bond, is scheduled for arraignment on May 20.

“Sophisticated financial scams such as these are a dangerous threat to the financial wellbeing of all Americans,” said United States Attorney Martin Estrada. “While my office will continue to root out and punish these deceitful schemes, I encourage everyone to educate themselves on pig butchering and other kinds of financial fraud to protect their families against such predatory activity. Vigilance is key."

“Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” said Deputy Attorney General Lisa Monaco. “While fraud in the crypto markets takes on many forms and hides in many far-off places, its perpetrators aren’t beyond the law’s reach. Today, we announce the arrests of two foreign nationals charged with laundering funds to the tune of at least $73 million tied to an international crypto investment scam. These arrests—made possible through the assistance of our international and U.S. partners—reflect the Justice Department’s ongoing commitment to disrupting the entire cybercrime ecosystem and stopping fraud across all financial markets.”

According to court documents, Li, Zhang, and other conspirators allegedly managed an international syndicate that laundered proceeds of cryptocurrency investment scams, which are also known as “pig butchering.” Victims of the schemes under investigation were fraudulently induced into transferring millions of dollars to U.S. bank accounts opened in the names of dozens of shell companies whose sole apparent purpose was to facilitate the laundering of fraud proceeds.

A network of money launderers then facilitated the transfer of those funds to other domestic and international bank accounts and cryptocurrency platforms in a manner designed to conceal the source, nature, ownership, and control of the funds. The fraud scheme involved more than $73 million laundered through U.S. financial institutions to bank accounts in The Bahamas, and converted to the virtual asset USDT, or Tether. A cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets.       

Li and Zhang allegedly instructed co-conspirators in the laundering network to open bank accounts in the names of various shell companies. Once the victims sent funds to the shell companies, Li and Zhang monitored the lower-level co-conspirators who transferred the proceeds overseas to bank accounts at Deltec Bank in The Bahamas. One of the Deltec Bank accounts was operated with the financial assistance of Li. The funds were then allegedly converted into cryptocurrency and sent to virtual-asset wallets, including at least one controlled by Li. Zhang allegedly also directly received victim funds. Communications revealed extensive coordination to facilitate the international money laundering, including chats discussing the commission structure for the network, the various shell companies used, victim information, and at least one video from a conspirator calling a U.S. financial institution.

“As alleged in the indictment, Li and Zhang helped launder millions of dollars obtained from victims of cryptocurrency investment scams,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Money laundering is critical to the success of these scams, allowing fraudsters to quickly move illicit proceeds and try to make them appear legitimate. The arrests announced today demonstrate the Criminal Division’s commitment to disrupting the sophisticated financial networks on which these scams depend and holding those involved accountable, no matter where they may be found.”

“Complex financial fraud schemes such as pig butchering present a clear and present threat to the financial infrastructure of the United States as countless numbers of Americans continue to be victimized by this predatory activity,” said Assistant Director of Investigations Brian Lambert of the U.S. Secret Service. “In 2023, the Secret Service with our partners recovered more than $1.1 billion in financial fraud and we are on pace to exceed that number this year. A special thank you to the special agents, support teams, and our prosecutorial partners for their exceptional work in bringing this case to justice.”

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The U.S. Secret Service’s Global Investigative Operations Center is investigating the case. The Homeland Security Investigations’ El Camino Real Financial Crimes Task Force, Customs and Border Protection’s National Targeting Center, Dominican Republic National Drug Directorate Sensitive Investigative Unit and Fugitive Task Force, U.S. Marshals Service, Drug Enforcement Administration, and the Justice Department’s Office of International Affairs provided assistance.

Assistant United States Attorneys Maxwell Coll of the Asset Forfeiture and Recovery Section and Nisha Chandran of the Cyber and Intellectual Property Crimes Section and Trial Attorney Stefanie Schwartz of the Justice Department’s National Cryptocurrency Enforcement Team (NCET) of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case. 

The NCET was established to combat the growing illicit use of cryptocurrencies and digital assets. Within the Criminal Division’s Computer Crime and Intellectual Property Section, the NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also sets strategic priorities regarding digital asset technologies, identifies areas for increased investigative and prosecutorial focus, and leads the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.

If you or someone you know is a victim of a cryptocurrency investment fraud, report it to www.IC3.gov. In your complaint, please reference “Pig Butchering PSA.” Include as much information as possible in your report, including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.