In a significant development for the cryptocurrency regulatory landscape, five individuals have pleaded guilty to their roles in an elaborate international crypto scam that defrauded American victims of $36.9 million, according to a recent announcement by the US Department of Justice (DOJ) .
The Perpetrators and Their Scheme
Joseph Wong, Yicheng Zhang, Jose Somarriba, Shengsheng He, and Jingliang Su admitted to participating in a sophisticated fraud operation that targeted Americans through what is commonly known as a “pig butchering” scheme . This type of scam involves building trust with victims over an extended period before ultimately leading them to financial ruin.
The criminals employed a multi-faceted approach to gain victims’ confidence:
• They initiated contact through social media platforms, messaging apps, and dating sites
• They engaged in lengthy text conversations and phone calls to establish rapport
• They gradually introduced victims to supposedly lucrative crypto investment opportunities
• They falsely claimed that investments were appreciating in value when in reality the funds were being stolen
The Money Trail
The investigation revealed a complex money laundering operation spanning multiple countries. The perpetrators funneled the stolen funds through:
1. US-based shell companies
2. A Deltec Bank account in the Bahamas under the name “Axis Digital Limited”
3. International bank accounts
4. Conversion to Tether (USDT) cryptocurrency
5. Transfer to crypto wallets controlled by individuals based in Cambodia
“Scammers would tell victims that their investments were appreciating in value when, in fact, those funds were stolen and not invested at all,” the DOJ stated .
Legal Consequences
The five men who pleaded guilty were located across several countries, including the United States, Spain, China, and Turkey . Zhang and Wong now face up to 20 years in prison for conspiracy to launder money, while the remaining three defendants could receive sentences of up to five years each for conspiring to run an unlicensed money services business .
This case brings the total number of guilty pleas connected to this particular scam to eight, including previous admissions from Daren Li and Lu Zhang on similar charges .
Broader Implications
This case highlights the ongoing challenges in the cryptocurrency space, where legitimate investment opportunities exist alongside sophisticated criminal operations. It underscores the importance of due diligence when considering crypto investments and the need for continued vigilance by regulatory authorities.
The successful prosecution demonstrates the DOJ’s commitment to cracking down on international crypto scams and money laundering operations, particularly those with connections to Southeast Asia.
