In a significant crackdown on international financial fraud, the U.S. Department of Justice (DOJ) has announced the arrests of two individuals accused of orchestrating a massive “pig butchering” cryptocurrency scam. The scheme, which allegedly defrauded victims of at least $73 million, involved sophisticated money laundering operations spanning multiple countries.
The DOJ announced the arrests of Daren Li, 41, and Yicheng Zhang, 38. Li, a dual citizen of China and St. Kitts and Nevis, was apprehended at Hartsfield-Jackson Atlanta International Airport and transported to the Central District of California. Zhang, a Chinese national residing in Temple City, California, was arrested in Los Angeles. Both individuals are accused of managing an international syndicate that laundered the proceeds of cryptocurrency investment scams through U.S. financial institutions and foreign bank accounts.
The “Pig Butchering” Scheme Explained
“Pig butchering” scams are a form of cryptocurrency investment fraud where scammers, often posing as potential romantic partners or financial advisors, build trust with their victims before convincing them to invest in fake or manipulated cryptocurrency schemes. The term derives from the scammers’ strategy of “fattening up” their victims with false promises of large returns before “slaughtering” them by taking all their money.
Details of the Fraudulent Operation
The indictment revealed that Li and Zhang, along with other conspirators, lured victims into depositing funds into U.S. bank accounts under the control of shell companies. These shell companies, purportedly legitimate businesses, were used to facilitate the movement of fraudulently obtained money. Once the funds were in these accounts, they were transferred to bank accounts in The Bahamas and converted into the stablecoin Tether (USDT).
A key component of the operation involved a complex network of lower-level co-conspirators who were instructed to open bank accounts and transfer funds. This network helped obscure the origins of the money received from pig butchering and making it difficult for authorities to trace. One cryptocurrency wallet associated with the scheme reportedly received over $341 million in virtual assets.
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Legal and International Cooperation
The arrests underscore the global nature of financial fraud and the collaborative efforts required to combat it. Deputy Attorney General Lisa Monaco emphasized that the arrests were made possible through the assistance of both international and U.S. partners, reflecting the DOJ’s commitment to disrupting the cybercrime ecosystem.
Principal Deputy Assistant Attorney General Nicole M. Argentieri highlighted the importance of targeting money laundering activities, which are crucial to the success of such scams. The DOJ, along with the U.S. Secret Service, Homeland Security Investigations, and various international agencies, played significant roles in the investigation and apprehension of the suspects.
Read the Justice Department Order
Charges and Potential Penalties
Li and Zhang face multiple charges, including conspiracy to commit money laundering and international money laundering. If convicted, they could each face up to 20 years in prison for each count. The case is being prosecuted by the National Cryptocurrency Enforcement Team (NCET) and the U.S. Attorney’s Office for the Central District of California.
Protecting Against Financial Fraud
U.S. Attorney Martin Estrada urged the public to educate themselves about financial scams like “pig butchering” to protect against predatory schemes. Awareness and vigilance are essential in safeguarding personal finances from such sophisticated fraud operations.
The DOJ encourages victims of cryptocurrency investment fraud to report incidents to the Internet Crime Complaint Center (IC3.gov), referencing “Pig Butchering PSA.” Providing detailed information, including transaction records and communication with scammers, can aid in ongoing investigations and potential recovery of lost funds.
The arrests of Daren Li and Yicheng Zhang mark a significant victory in the fight against international cryptocurrency fraud. The case highlights the importance of international cooperation and robust legal frameworks in tackling complex financial crimes. As digital assets continue to evolve, so too must the strategies to prevent and prosecute their illicit use, ensuring the protection of investors worldwide.
