Summary:
• The U.S. Department of Justice arrested two Chinese citizens in connection with a $73 million international cryptocurrency fraud.
• This scam is known as “pig killing” and involves money laundering through shell companies.
• The case highlights the growing attention being paid to scams involving cryptocurrencies.
The U.S. Department of Justice (DOJ) has arrested two Chinese citizens, Daren Li and Yicheng Zhang, for orchestrating a massive cryptocurrency scam known as “pig-killing” that involved laundering at least $73 million.
The arrests highlight how scams remain a significant problem in the crypto industry.
The duo is an international fraud group
According to the DOJ, officers arrested Li at Hartsfield-Jackson Atlanta International Airport on April 12 and transferred him to central California. Zhang was arrested in Los Angeles at the same time.
Deputy Attorney General Lisa Monaco said:
“We are announcing the arrests of two foreign nationals accused of leading a money laundering scheme tied to an international crypto investment scam that exploited the borderless nature of virtual currencies and online communications to defraud victims.”
The DOJ found extensive coordination to facilitate international money laundering from communications that included discussions of the network’s commission structure, various shell companies used, victim information, and at least one video of an accomplice making calls to a U.S. financial institution.
Li and Zhang managed an international "pig-killing" investment fraud group. They instructed accomplices in the money laundering network to open bank accounts in the names of shell companies. Once the victims sent funds to the shell companies, Li and Zhang monitored the lower-level accomplices to transfer the proceeds to the overseas bank accounts of Deltec Bank in the Bahamas.
The scheme involved more than $73 million converted into USDT stablecoins. In addition, one cryptocurrency wallet in the scheme received more than $341 million in virtual assets.
Li and Zhang are charged with conspiracy to launder money and six substantive counts of international money laundering. If convicted, they face up to 20 years in prison on each count.
In response to the case, Brian Lambert, Assistant Director of Investigations for the U.S. Secret Service, explained that the U.S. financial infrastructure is under threat from sophisticated financial fraud schemes.
“Sophisticated financial fraud schemes like 'Pig Killer' pose a clear and imminent threat to America's financial infrastructure as countless Americans continue to fall victim to this predatory activity,” Lambert noted.
Lambert's statement is consistent with data from the Federal Bureau of Investigation (FBI). According to the FBI's 2023 Internet Crime Report, investment scams are the most expensive crime tracked by the IC3 project.
Losses from investment scams increased 38% from $3.31 billion in 2022 to $4.57 billion in 2023. There were 17,823 complaints of confidence/romance crimes throughout the year.
False promises and empty wallets: Analysis of the "pig-killing" scam
The "pig-killing" scam involves scammers creating fake identities to contact potential victims, usually through text messages, social media platforms or dating apps. Gradually, these scammers build a seemingly real relationship with their targets through regular and friendly interactions. This method is similar to the practice of fattening pigs before slaughter, hence the name.
Once a relationship is established, the scammers introduce cryptocurrency into the conversation. They typically don’t ask for money or cryptocurrency directly. Instead, they offer to help victims with investment strategies and direct them to platforms they control.
Initially, the victim may transfer a small amount of funds to a cryptocurrency exchange. To make the scam believable, the scammers provide false account information to show that the victim's investment is growing.
They may even allow victims to withdraw part of their initial investment to appear legitimate. The scammers continue to pressure victims to send more funds until they are completely depleted of funds.
A United Nations report describes Southeast Asia’s Mekong region as the epicentre of such criminal activity. A growing number of casinos combined with ungovernable borders and armed groups in Myanmar’s long civil war create ideal conditions for large-scale money laundering.
Conclusion:
The successful cracking of this "pig-killing" cryptocurrency fraud case demonstrates the cooperation and determination of international law enforcement agencies in combating cross-border financial crimes. The arrest and charges of Daren Li and Yicheng Zhang by the U.S. Department of Justice send a clear warning to potential fraudsters: no matter where they are, using cryptocurrencies for illegal activities will be severely punished by law. This not only demonstrates the law's zero-tolerance attitude towards financial crimes, but also reflects its firm commitment to protecting the interests of investors and maintaining the order of the financial market.
At the same time, this case also reminds investors and the public to be more vigilant against cryptocurrency-related scams. Investors should conduct adequate investigations and risk assessments when investing in cryptocurrencies to avoid becoming victims of scams. Regulatory agencies and law enforcement agencies in various countries should strengthen cooperation to jointly formulate and implement effective regulatory policies to promote the healthy development of the cryptocurrency industry and ensure that its potential is fully realized while minimizing risks. #加密货币诈骗 #杀猪盘
