In a major financial crime case involving cryptocurrency, two individuals, Daren Li and Yicheng Zhang, have pleaded guilty to charges in a scheme that reportedly scammed investors out of over $73 million.
The case, prosecuted in the U.S. by the Department of Justice (DOJ), has highlighted a style of scam called “pig butchering,” where fraudsters gain the trust of victims and then exploit them financially through fake cryptocurrency investments.
The pig butchering scams used by Li and Zhang followed a predictable but effective formula. First, the scammers built relationships with potential victims on social media platforms and dating apps.
Often, the fraudsters pretended to be well-off professionals or financial advisors and convinced victims they could earn high returns by investing in cryptocurrencies. Once trust was built, victims were encouraged to transfer significant sums to accounts that were supposedly meant for their investments.
The scam operated through a complex web of fake businesses, or “shell companies,” set up by Li, Zhang, and other conspirators. When victims transferred their funds, the money was sent to U.S. bank accounts under the names of these fake companies. Li and Zhang allegedly directed other people in their network to further launder the money.
These operatives would move funds into other accounts or overseas, often to places like The Bahamas. To make the transfers even harder to track, the funds were eventually converted into stablecoin – Tether (USDT).
Investigation and arrest
The complex and international nature of this scam led to a multi-agency investigation involving the U.S. Secret Service, Homeland Security, and other agencies.
The DOJ’s National Cryptocurrency Enforcement Team played a crucial role in unmasking the laundering network. In May 2024, arrests were made, with the court proceedings revealing the extent of the conspiracy.
Authorities described how the scammers not only tricked their victims but also monitored their own operatives closely, ensuring everyone in the laundering chain followed specific instructions to hide the money’s origin.
The guilty pleas represent a victory for U.S. law enforcement, which has been increasing its focus on financial crimes involving cryptocurrencies. Authorities say Li and Zhang’s actions threatened the financial security of numerous individuals and could undermine public trust in cryptocurrency.
Both men now face up to 20 years in prison on each charge of money laundering, which reflects the seriousness with which U.S. courts treat these offenses.
