In a shocking development, a money launderer connected to Cambodian “pig butchering” operations has pleaded guilty to one count of conspiracy to commit money laundering in a scheme that washed millions of dollars in proceeds from cryptocurrency investment fraud, according to the US Department of Justice (DOJ).
Daren Li, a 41-year-old native of China’s Shaanxi province who also holds citizenship in St. Kitts and Nevis, laundered over $73 million from fraud victims using a network of shell companies and international bank accounts. Li faces up to 20 years in prison when he is sentenced on March 3, 2024.
A Tangled Web of Deceit
Li was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport. The DOJ identified him as a resident of China, Cambodia, and the United Arab Emirates. On May 16, 38-year-old Chinese national Yicheng Zhang, who resides in California, was also arrested in Los Angeles.
“Although Li committed this crime outside of the United States, he was not beyond the reach of the Justice Department,” said Nicole M. Argentieri, chief of the DOJ’s Criminal Division.
– DOJ Criminal Division Chief Nicole M. Argentieri
According to the FBI, losses from crypto investment fraud reached a staggering $4.5 billion in 2023. As this figure is based on reported incidents, the actual total amount is likely much higher.
The Insidious “Pig Butchering” Schemes
Among the various types of fraud, “pig butchering” has drawn significant attention. It targets victims by having perpetrators build online friendships before encouraging them to invest in a cryptocurrency platform, sometimes even pretending to have inside knowledge of the platform’s workings to make the investment seem secure. Victims may initially be able to withdraw money from the platform, prompting them to invest substantial sums before withdrawals are frozen.
Pig butchering fraud is widely perpetrated by companies linked to organized crime, particularly in Southeast Asia. In Myanmar and Cambodia alone, over 220,000 individuals are suspected to be involved, some of whom were trafficked to the region under false pretenses of legitimate employment, according to UN data.
Following the Money Trail
Court documents reveal Li’s role in laundering money from victims. He instructed co-conspirators to open U.S. bank accounts in the names of shell companies and monitor the receipt and execution of interstate and international wire transfers of victim funds.
Li and his co-conspirators then received victim funds into financial accounts they controlled and tracked the conversion into virtual currency, namely Tether’s USDT stablecoin, and its subsequent distribution into cryptocurrency wallets they also controlled.
Some of these proceeds were in bank accounts at Deltec Bank in the Bahamas. In June, authorities seized over $58 million at the bank during a probe into international money laundering, bank fraud and wire fraud. A Deltec Bank representative told CoinDesk at the time that the investigation involved crimes committed by individuals and denied any wrongdoing by the bank.
A Global Crackdown on Crypto Crime
This case highlights the growing international cooperation among law enforcement agencies to combat cryptocurrency-related fraud and money laundering. As digital assets gain mainstream adoption, criminals have exploited the pseudonymous nature of many cryptocurrencies to perpetrate large-scale scams and launder illicit proceeds across borders.
However, authorities are stepping up their efforts to trace and recover stolen funds, as well as bring perpetrators to justice. The arrest and guilty plea of Daren Li sends a strong message that even those operating from outside the United States cannot evade the long arm of the law.
As the battle against crypto fraud and money laundering intensifies, increased international collaboration, coupled with the development of more sophisticated blockchain analytics tools, will be crucial in safeguarding investors and maintaining the integrity of the global financial system in the digital age.
