Money Launderer Who Moved Scam Victims’ Funds Faces Up to Two Decades in U.S. Prison

As a seasoned crypto investor with over a decade of experience, I can’t help but feel disheartened and outraged by the news of Daren Li’s criminal activities. Having lost a significant portion of my savings to similar scams in the past, I understand the pain and frustration that victims go through. It’s a sickening reminder of how easy it is for unscrupulous individuals like Li to exploit the trusting nature of crypto investors.

A person of Chinese nationality who was connected with illegal “pig butchering” activities in Cambodia admitted guilt for conspiring to launder money as part of a plan to wash millions of dollars obtained from cryptocurrency fraud schemes, according to the U.S. Department of Justice (DOJ), on November 12th.

41-year-old Daren Li, originally from Shaanxi province in China but also possessing citizenship from St. Kitts and Nevis, stands accused by the DOJ of laundering more than $73 million obtained through fraudulent means using a complex network of dummy corporations and offshore bank accounts. His sentencing is scheduled for March 3, and he faces a possible sentence of up to 20 years in prison.

On April 12th, Li was apprehended at Hartsfield-Jackson Atlanta International Airport. The Department of Justice referred to him as an individual with residency in China, Cambodia, and the United Arab Emirates. Simultaneously, Yicheng Zhang, a 38-year-old Chinese national residing in California, was taken into custody in Los Angeles on May 16th.

As a crypto investor, I understand that geographical boundaries may seem vast, but they don’t shield wrongdoers from the long arm of justice. Nicole M. Argentieri, head of the Justice Department’s criminal division, made this clear in her statement: “Even if Li committed this offense from outside the United States, he was not immune to our reach.” Today’s plea is a testament to our unwavering dedication to collaborate with both domestic and international partners. Our goal remains to bring to justice anyone who has defrauded U.S. crypto investors, regardless of their location.

In the year 2023, the FBI estimates that financial losses due to fraudulent cryptocurrency investments amounted to a staggering $4.5 billion. Given that this figure is derived from reported cases alone, it’s reasonable to assume that the actual total could be significantly greater.

One variation of the many fraudulent activities is known as “pig butchering”. This scheme lures potential victims into online relationships where they are later persuaded to put money into a supposed cryptocurrency trading platform. Sometimes, the scammers create an illusion of having exclusive insights about the platform’s inner workings, making it seem like an investment would be a guaranteed success. Initially, the victims can withdraw their funds from the platform, causing them to invest larger sums due to the perceived safety and profitability. However, the option to withdraw money is eventually cut off, leaving the victims unable to recover their investments.

Large-scale Ponzi schemes known as “pig butchering” are often run by organizations with criminal connections, particularly in Southeast Asia. The UN estimates that over 220,000 people in Myanmar and Cambodia may be involved in these activities. Some of these individuals have been lured to the region under the false promise of legitimate employment.

It is stated in court records that Li was involved in the process of disguising money taken from victims. He directed his accomplices to set up bank accounts in the U.S., under the names of shell companies, and kept track of incoming and outgoing interstate and international wire transfers of the victim’s funds.

Later on, Li and his fellow plotters gained access to the victims’ money in bank accounts they managed and kept track of the transformation into digital currency, focusing particularly on Tether’s USDT stablecoin and its movement into cryptocurrency wallets they too supervised.

A portion of these earnings ended up in accounts at Deltec Bank in the Bahamas. In June, law enforcement officials confiscated approximately $58 million from this bank as part of an inquiry into international money laundering, wire fraud, and bank fraud. When asked about it by CoinDesk, a representative for Deltec Bank stated that the investigation pertained to actions taken by specific individuals and maintained that the bank itself was not involved in any wrongdoing.