In a shocking turn of events, a Chinese national has admitted his guilt in a far-reaching money laundering conspiracy that funneled over $73 million stolen from crypto investment scam victims into wallets under his control. The case, prosecuted by the US Department of Justice (DOJ), has pulled back the curtain on the nefarious world of international “pig butchering” operations and the devastating losses inflicted on unsuspecting investors.
The Mastermind Behind the Scheme
Daren Li, a 41-year-old native of China’s Shaanxi province who also holds citizenship from St. Kitts and Nevis, pleaded guilty to orchestrating an elaborate money laundering scheme that moved millions in ill-gotten gains through a web of shell companies and international bank accounts. Li, who the DOJ described as a resident of China, Cambodia, and the United Arab Emirates, now faces a maximum sentence of 20 years in federal prison.
“Even though Li committed this offense from outside the United States, he was not beyond the reach of the Justice Department,” remarked Nicole M. Argentieri, head of the Justice Department’s criminal division.
The Staggering Scope of Crypto Scams
The sheer magnitude of losses from crypto investment scams is astounding. According to the FBI, these fraudulent schemes siphoned off a staggering $4.5 billion from victims in 2023 alone. However, experts caution that this figure, based solely on reported incidents, likely represents just the tip of the iceberg.
The Insidious Tactics of Pig Butchering
Among the various types of scams, “pig butchering” has garnered significant attention for its particularly insidious tactics. In these schemes, scammers invest time in befriending their targets online before luring them into investing on a fraudulent cryptocurrency platform. Some even go so far as to pose as insiders with secret knowledge of the platform’s inner workings to further entice victims.
Initially, victims are allowed to withdraw funds from the platform, bolstering their confidence and encouraging them to invest even larger sums. However, once hooked, withdrawals are suddenly frozen, leaving the victims high and dry.
Organized Crime’s Grip on Pig Butchering
These pig butchering scams are often perpetrated on a massive scale by companies with ties to organized crime, particularly in Southeast Asia. The United Nations estimates that Myanmar and Cambodia alone are home to over 220,000 individuals involved in these schemes, many of whom were trafficked to the region under false pretenses of legitimate employment.
Li’s Role in Laundering the Loot
Court documents reveal that Li played a crucial role in laundering money stolen from victims. He directed his co-conspirators to open US bank accounts in the names of shell companies and monitored the receipt and execution of interstate and international wire transfers of victim funds.
Li and his associates would receive victim funds into financial accounts they controlled and oversee the conversion into virtual currency, specifically Tether’s USDT stablecoin, followed by distribution into cryptocurrency wallets also under their control. Some of these ill-gotten gains ended up in bank accounts at Deltec Bank in the Bahamas.
International Crackdown on Money Laundering
In June, authorities seized over $58 million in funds from the bank during an investigation into international money laundering, wire, and bank fraud. A representative for Deltec Bank told CoinDesk at the time that the investigation related to crimes committed by individuals and denied any wrongdoing.
As the case against Li unfolds, it serves as a stark reminder of the pervasive threat posed by crypto investment scams and the complex criminal networks that facilitate the laundering of stolen funds. With millions falling victim to these schemes each year, increased international cooperation and vigilance will be crucial in the fight against this global menace.
