Crypto Scam: Five Plead Guilty in Shocking $37M Scheme

Breaking news in the world of cryptocurrency crime: five individuals have pleaded guilty to their roles in a massive crypto scam operation. This international scheme targeted American citizens, stealing nearly $37 million and moving the funds to Cambodia.

Unpacking the $37M Crypto Scam

This elaborate crypto scam involved an international ring accused of siphoning millions from victims. The group used shell companies and US bank accounts to collect the stolen money. Once received, the funds were quickly converted into Tether (USDT) and transferred to a crypto wallet controlled from a scam center located in Cambodia. The US Attorney’s Office for the Central District of California announced these guilty pleas, highlighting the ongoing efforts by US authorities to combat crypto crime and money laundering rings operating globally, particularly those with ties to regions known for such activities.

How the Money Laundering Scheme Operated

The mechanics of this sophisticated money laundering operation involved several layers designed to obscure the source and destination of the stolen funds. Here’s a breakdown of their method:

• **Victim Contact:** Scammers initially contacted victims through various online platforms, including social media, messaging apps, and dating apps. They built trust through lengthy conversations and even phone calls.
• **Investment Deception:** Victims were convinced to invest in a fraudulent crypto scheme. They were shown fabricated reports indicating their investments were growing, when in reality, the funds were simply being stolen.
• **Fund Collection:** Stolen funds were deposited into US bank accounts managed by members of the ring.
• **Shell Company Layer:** Shell companies, like “Axis Digital,” were established, often using offshore bank accounts (such as one at Deltec Bank in the Bahamas), to receive victim funds.
• **Crypto Conversion:** Funds were converted into cryptocurrency, specifically Tether (USDT), to facilitate easy international transfer.
• **International Transfer:** The USDT was sent to crypto wallets controlled by the leaders of the scam centers in Cambodia.

This complex process allowed the criminals to quickly move illicit gains out of the reach of American victims and authorities.

Who Faced the Guilty Plea?

Five individuals have now entered a guilty plea in connection with this case. They were located across various countries including the US, Spain, China, and Turkey. The defendants are Joseph Wong, Yicheng Zhang, Jose Somarriba, Shengsheng He, and Jingliang Su. Each played a specific role in the operation, from founding shell companies and managing bank accounts to converting funds and running money laundering networks.

This brings the total number of individuals who have pleaded guilty in relation to this specific crypto crime operation to eight. Previously, Daren Li and Lu Zhang also pleaded guilty to money laundering charges last year.

Sentencing and Broader Crackdown on Crypto Crime

The consequences for those involved are significant. Yicheng Zhang and Joseph Wong, who pleaded guilty to money laundering conspiracy, face potential sentences of up to 20 years in prison. The other three who pleaded guilty to conspiracy to operate an unlicensed money services business could receive up to five years. Jingliang Su, in custody since November 2024, has a sentencing hearing scheduled for November 17.

This case underscores the US government’s intensified crackdown on international crypto crime and money laundering operations. Authorities are actively pursuing those who use cryptocurrency to facilitate illicit activities. In a related move, the US Treasury Department is taking steps to block Cambodia-based Huione Group from accessing the US banking system, accusing the firm of assisting entities like North Korea’s Lazarus Group in laundering cryptocurrency. The Treasury’s Financial Crimes Enforcement Network proposed prohibiting US financial institutions from engaging with accounts tied to Huione Group, citing its role as a “marketplace of choice for malicious cyber actors.” While an affiliate of Huione Group reportedly had its communications shut down on Telegram, evidence suggests potential continued activity through other channels, highlighting the persistent challenge in combating these networks.

Conclusion: A Win Against International Crypto Scams

The guilty plea from these five individuals marks a notable success in the fight against large-scale international crypto scam operations targeting Americans. It demonstrates the commitment of US law enforcement to dismantle complex money laundering networks that leverage cryptocurrencies. While challenges remain, particularly with groups operating from regions like Cambodia and links to state-sponsored actors, this case sends a clear message: authorities are actively pursuing those involved in crypto crime, regardless of where they are located. Staying informed and vigilant is crucial for anyone engaging with cryptocurrencies to avoid falling victim to similar schemes.