Crypto Scammer Busted: $73 Million Laundering Scheme Exposed

Daren Li, a 41-year-old citizen of both the U.S. and China, has pleaded guilty to helping launder $73 million that was stolen in multiple crypto scams. On November 11, Li admitted before a California federal court to one count of conspiracy to commit money laundering. Prosecutors say the scam involved fake crypto investment schemes, like “pig butchering,” and operated from August 2021 to April 2023.

Foreign national pleads guilty to laundering millions of dollars in illicit proceeds from cryptocurrency investment scams https://t.co/UqPoS8hpS5

— US Attorney L.A. (@USAO_LosAngeles) November 12, 2024

How the $73M Crypto Scam Worked

Per the U.S. Justice Department, Li, his partner Yicheng Zhang, and their cohorts allegedly ran a transnational criminal network that laundered millions from these “pig butchering” scams. In this type of scam, fraudsters gain victims’ trust, convince them to invest large sums, and then cater away with the funds.

From court documents made public, Li and Zhang instructed co-conspirators to open U.S. bank accounts under fake companies, or “shell companies,” to “hide the nature, location, and ownership” of the stolen money. Victims were tricked into transferring millions of dollars into these accounts, which were then used to launder the funds. Once the money was in these accounts, it was swapped into Tether (USDT), a popular digital stablecoin, and then sent to digital wallets controlled by Li and his associates. One of these wallets reportedly received more than $341 million in digital assets.

“The fraud scheme involved more than $73 million laundered through U.S. financial institutions to bank accounts in the Bahamas and converted to the virtual asset USDT, or Tether,” the DOJ stated.

Arrests and Possible Sentencing

Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in a November 12 statement that Li operated outside the U.S., using “a network of fake companies and international bank accounts” to move the stolen money around.

Li admitted that $73.6 million of the stolen funds went directly into accounts linked to the scheme, with at least $59.8 million moved through U.S. shell companies to help with the laundering.

Li was arrested on April 12 at Atlanta airport, while his alleged partner, Yicheng Zhang, was arrested in Los Angeles on May 16.

Initially, Li faced several charges, including conspiracy to launder money and six counts of international money laundering. Each count could have meant up to 20 years in prison, totaling 140 years if convicted on all charges.

After his guilty plea, Judge R. Gary Klausner scheduled Li’s sentencing for March 3, 2025. Li could face up to 20 years in prison, three years of supervised release, and a fine of $500,000 or double the amount he gained from the crime—whichever is greater.

Prosecutors also say that Li may have to repay the victims, with possible restitution to the tune of $4.5 million to the full $73 million.