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

• Daren Li used multiple bank accounts and Tether to move money stolen from victims.

• More than $4.5 billion was lost to cryptocurrency investment scams last year.

A Chinese citizen linked to Cambodian “pig butchering” operations pleaded guilty to one count of conspiracy to commit money laundering in a scheme to launder millions of dollars in proceeds of cryptocurrency investment scams, the U.S. Department of Justice (DOJ) said on Nov. 12.

Daren Li, a 41-year-old native of Shaanxi province in China who also holds citizenship from St. Kitts and Nevis, laundered over $73 million from scam victims using a web of shell companies and international bank accounts, the DOJ said. He will be sentenced on March 3 and faces a maximum of 20 years in prison.

Li was arrested on April 12 at Hartsfield-Jackson Atlanta International Airport. The DOJ described him as a resident of China, Cambodia and the United Arab Emirates. Co-conspirator Yicheng Zhang, a 38-year-old Chinese national who lives in California, was arrested in Los Angeles on May 16.

“Although Li committed this offense from outside the United States, he was not beyond the reach of the Justice Department,” Nicole M. Argentieri, head of the Justice Department’s criminal division, said in a statement. “Today’s plea reflects our ongoing commitment to working with our domestic and international partners to hold accountable anyone responsible for cryptocurrency investment fraud against U.S. victims — wherever the perpetrators are located.”

Losses from crypto investment scams hit $4.5 billion in 2023, according to the FBI. As the figure is based on reported incidents, the real total is likely to be much higher.

Among the different types of scams, pig butchering has garnered significant attention. It targets victims by having perpetrators strike up friendships online before enticing them to invest in a cryptocurrency platform, sometimes even pretending to have secret knowledge of the inner workings of the platform to make an investment a sure bet. Victims are initially able to withdraw money from the platform, which encourages them to invest more significant amounts before withdrawals are frozen.

Pig butchering scams are conducted at scale by companies with links to organized crime, particularly in Southeast Asia. Myanmar and Cambodia alone are suspected of having over 220,000 individuals involved, some of whom have been trafficked to the region on false pretenses of legitimate jobs, according to the United Nations.

Li played a role in laundering the money from victims, according to court documents. He instructed co-conspirators to open U.S. bank accounts established on behalf of shell companies and would monitor the receipt and execution of interstate and international wire transfers of victim funds.

Li and his co-conspirators would then receive victims’ funds in financial accounts they controlled and monitor the conversion to virtual currency, specifically Tether’s USDT stablecoin and its subsequent distribution to cryptocurrency wallets they also controlled.

Some of these proceeds were to bank accounts at Deltec Bank in the Bahamas. In June, authorities seized over $58 million in funds from the bank during an investigation into international money laundering, wire and bank fraud. A representative for Deltec Bank told CoinDesk at the time that the investigation related to crimes committed by individuals and denied any wrongdoing