In a significant development in the fight against cryptocurrency-related financial crimes, Chinese citizen Daren Li has pleaded guilty to conspiracy to commit money laundering in connection with his role in funneling millions of dollars stolen from crypto investment scam victims. The elaborate scheme, which involved a network of shell companies and international bank accounts, highlights the growing threat of so-called “pig butchering” operations that target unsuspecting investors.
From China to Cambodia: A Web of Deceit
Daren Li, a 41-year-old native of China’s Shaanxi Province and citizen of Saint Kitts and Nevis, found himself at the center of a far-reaching investigation into international money laundering. According to the U.S. Department of Justice (DOJ), Li played a key role in laundering over $73 million obtained from victims of cryptocurrency investment scams.
The funds were transferred through a complex network of shell companies and bank accounts spanning multiple countries, including China, Cambodia, and the United Arab Emirates. Li, who was arrested at Atlanta’s Hartsfield-Jackson International Airport on April 12, faces up to 20 years in prison when he is sentenced on March 3, 2024.
The Allure of “Pig Butchering” Scams
Central to Li’s case is the growing phenomenon of “pig butchering” scams, which have become increasingly prevalent in Southeast Asia. These insidious schemes typically involve perpetrators cultivating online relationships with their victims before enticing them to invest in fraudulent cryptocurrency platforms.
The scammers often go so far as to claim insider knowledge of the platform’s workings, presenting the investment as a surefire bet. Initially, victims may be allowed to withdraw money from the platform, bolstering their confidence and encouraging them to invest larger sums—until withdrawals are abruptly blocked.
– According to a close source familiar with pig butchering tactics
The scale of these operations is staggering. The United Nations estimates that Myanmar and Cambodia alone are home to over 220,000 individuals involved in pig butchering scams, many of whom were lured to the region under false pretenses of legitimate employment.
Following the Money: Li’s Laundering Scheme
Court documents reveal the intricate workings of Li’s money laundering operation. He allegedly directed his co-conspirators to open U.S. bank accounts on behalf of shell companies, which were then used to receive and execute interstate and foreign wire transfers of funds from the scam victims.
Once the stolen funds were in accounts controlled by Li and his associates, they were converted into the Tether (USDT) stablecoin and distributed to crypto wallets also under their control. A portion of these illicit proceeds found their way to accounts at the Bahamas-based Deltec Bank, which itself has been the subject of a money laundering investigation resulting in the seizure of over $58 million in June.
The Staggering Cost of Crypto Investment Scams
The case against Daren Li underscores the alarming prevalence and cost of cryptocurrency investment scams. In 2023 alone, the Federal Bureau of Investigation (FBI) reported losses exceeding $4.5 billion tied to crypto-related fraud—a figure that likely represents only a fraction of the true toll, as it relies on incidents reported by victims.
While Li committed this offense from outside the United States, he was not outside the reach of the Department of Justice. Today’s plea reflects our continued commitment to working with our domestic and international partners to hold accountable anyone responsible for crypto investment frauds against U.S. victims, wherever the perpetrators are located.
– Nicole M. Argentieri, Chief of the DOJ’s Criminal Division
As the crypto industry continues to grapple with the challenges posed by bad actors, cases like Li’s serve as a stark reminder of the importance of vigilance and international cooperation in combating financial crimes. While the promise of cryptocurrency remains compelling for many investors, the ever-present risk of falling victim to sophisticated scams underscores the need for caution and due diligence in navigating this rapidly evolving landscape.
