DoJ Arrests Two in $73M Crypto Money Laundering Scheme

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The United States Department of Justice (DoJ) have arrested two individuals accused of orchestrating a sophisticated money laundering scheme that funneled over $73 million through U.S. financial institutions and ultimately converted the funds into Tether’s USDT token.

The DoJ announced on Friday that Daren Li was apprehended at Atlanta’s airport in Georgia on April 12, while Yicheng Zhang was arrested in Los Angeles on Thursday, May 16. An indictment unsealed in a California court on May 16 detailed their alleged involvement in the extensive criminal operation.

DoJ Arrests Li and Zhang

Li, Zhang, and their associates are accused of running a transnational criminal network that laundered millions from “pig butchering” crypto scams. In these schemes, fraudsters gain the trust of their victims, persuade them to invest substantial amounts of money, and then abscond with the funds.

The defendants allegedly directed co-conspirators to open U.S. bank accounts under the names of shell companies. These accounts were then used to receive millions of dollars transferred by the victims. Once the funds were in these accounts, they were laundered through a series of domestic and international bank transfers.

DoJ Provides Additional Details

The DoJ provided further details, stating, “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 face charges of conspiring to launder money and six counts of international money laundering. If convicted, they could each face up to 20 years in prison for each count, potentially totaling 140 years behind bars.

Challenges Possessed by Cryptocurrencies

Deputy Attorney General Lisa Monaco acknowledged the challenges posed by cryptocurrency fraud but reaffirmed the department’s commitment to holding perpetrators accountable.

“Cryptocurrency offers new opportunities for criminals to exploit, but we are determined to stay ahead of these threats,” Monaco stated.

Pig butchering scams have proven to be highly lucrative for online criminals. In November 2023, the DOJ seized $9 million from a scheme that targeted more than 70 U.S. citizens. The rising frequency and severity of such scams have alarmed lawmakers and regulators, prompting increased scrutiny and intervention.

Intensification of Crypto Crackdowns

In response to the growing threat, the DoJ and other agencies have intensified efforts to curb crypto scams and related incidents. 

This includes proposed regulations and industry guidelines aimed at protecting investors and preserving the integrity of digital assets. However, some industry insiders warn that overly stringent regulations could hinder the sector’s growth and innovation.

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