The US Department of Justice has arrested two Chinese nationals in connection with a $73 million money laundering scheme.
According to the May 17 announcement, the defendants collected illegal funds through multiple U.S. financial institutions and then exchanged them for the stablecoin USDT.
The defendant, Darren Li, is a dual citizen of China and St. Kitts and Nevis. His colleague, Zhang Yicheng, is a Chinese national living in Temple City, California.
Mr. Li and Mr. Zhang, along with other accomplices, operated a money laundering network that laundered millions of dollars obtained from the “pig butchering” crypto scam.
These scams typically begin with malicious actors gaining the victim's trust and, once the victim is convinced, asking them to invest a large sum of money in a lucrative scheme. Once the victim transfers the funds, the scammer disappears with the funds.
In this case, the two men instructed their accomplices to open multiple U.S. bank accounts under the guise of “dozens of shell companies,” the statement said. The group had victims transfer millions of dollars into these accounts, and all activities were monitored by Lee and Chan.
Once the funds were secured, they were transferred to various domestic and international bank accounts.
Regulators flagged several accounts as having been created at Deltec Bank in the Bahamas. At least one of these accounts was allegedly operated with financial support from Mr. Lee.
Funds from these accounts are converted to USDT and have been a popular choice among scammers over the past few years.
“The virtual currency wallets involved in this scheme received over $341 million in virtual assets,” the Justice Department said.
Mr Lee was arrested on April 12th at an airport in Atlanta, Georgia, US, followed by Mr Chan in Los Angeles on May 16th.
The two are charged with six counts of international money laundering and conspiracy to commit money laundering. If proven guilty, each charge faces up to 20 years in prison.
Recent research estimates that pig slaughter scams earn more than $75 billion from victims worldwide.
Last month, the Brooklyn District Attorney's Office cracked down on one such scam after multiple charges were filed across the country, but prior to that, the Justice Department said it stole from 70 victims in a pig butchering scam in 2023. 9 million USDT was frozen.
