The US Department of Justice announced on Thursday (May 16) that two Chinese citizens have been arrested and charged with conspiracy to commit money laundering and six substantive international money laundering offenses. The indictment alleges that they played significant roles in a “Pig Butchering” fraud scheme that used cryptocurrency for money laundering.
Daren Li, 41 (referred to as Li), holds dual citizenship of China and Saint Kitts and Nevis Federation, and is a resident of China, Cambodia, and the United Arab Emirates. He was arrested on April 12 at the Hartsfield-Jackson Atlanta International Airport and subsequently transferred to the Central District of California. Yicheng Zhang, 38 (referred to as Zhang), a Chinese citizen and resident of Temple City, California, was arrested and arraigned in Los Angeles today (May 16).
According to court documents, Li and Zhang instructed co-conspirators in the money laundering network to open bank accounts in the names of various shell companies. Victims were tricked into transferring funds to US bank accounts opened in the names of dozens of shell companies, with amounts often reaching millions of dollars. The sole purpose of these shell companies was to facilitate money laundering.
Subsequently, the money launderers’ criminal network would assist in transferring these funds to other domestic and international bank accounts and cryptocurrency platforms in a way that obscured the source, nature, ownership, and control of the funds.
The fraudulent scheme has laundered over $73 million through US financial institutions to bank accounts in the Bahamas and converted into the virtual asset Tether. A cryptocurrency wallet involved in the scheme received over $341 million in virtual assets.
According to a grand jury indictment released by a US District Court, if convicted, the two defendants could face up to 20 years in prison for each charge.
Yesterday, Zhang pleaded not guilty to the charges, so the court set the trial date for July 9. Zhang remains in federal custody, and a detention hearing is scheduled for May 21. Additionally, a federal magistrate judge has ordered Li to be detained without bail, and he is set to be arraigned on May 20.
“Complex financial fraud schemes like this pose a dangerous threat to the economic well-being of all Americans,” said US Federal Prosecutor Martin Estrada in a court statement. “My office will continue to root out and prosecute these scams, and I encourage everyone to understand ‘Pig Butchering’ and other types of financial fraud to protect themselves and their families from such predatory activities. Vigilance is key.”