Daren Li, a dual citizen of China and St. Kitts and Nevis, and Yicheng Zhang, a Chinese national residing in Temple City, California, were both taken into custody and now face charges of conspiracy to commit money laundering and international money laundering.

The arrests were made as a result of an ongoing investigation into a sophisticated operation that allegedly laundered proceeds from cryptocurrency investment scams, commonly referred to as "pig butchering." This fraudulent scheme exploited the borderless nature of virtual currencies and online communication to defraud victims.

According to court documents, Li, Zhang, and their co-conspirators effectively managed an international network that facilitated the laundering of illicit funds obtained through the cryptocurrency investment scams. Victims were deceitfully induced into transferring millions of dollars to numerous shell companies' bank accounts, which were specifically created to facilitate the laundering of the fraud proceeds.

The indictment reveals that more than $73 million was laundered through U.S. financial institutions before being converted into the virtual asset USDT, or Tether, and transferred to bank accounts in The Bahamas. Additionally, a cryptocurrency wallet involved in the scheme received over $341 million in virtual assets.

Deputy Attorney General Lisa Monaco emphasized the Justice Department's commitment to disrupting cybercrime networks and preventing fraud across all financial markets. She stated, "While fraud in the crypto markets takes on many forms and hides in many far-off places, its perpetrators aren't beyond the law's reach."

Principal Deputy Assistant Attorney General Nicole M. Argentieri stressed the critical role money laundering plays in facilitating such scams, enabling fraudsters to quickly move illicit proceeds and attempt to legitimize them. Argentieri added, "The arrests announced today demonstrate the Criminal Division's commitment to disrupting the sophisticated financial networks on which these scams depend and holding those involved accountable, no matter where they may be found."

The investigation revealed that Li and Zhang instructed lower-level co-conspirators in their money laundering network to open bank accounts under various shell companies' names. They closely monitored the process as the funds were transferred overseas to Deltec Bank in The Bahamas. Li operated one of the Deltec Bank accounts, and the funds were eventually converted into cryptocurrency and sent to virtual-asset wallets, including one controlled by Li himself. Zhang was alleged to have directly received funds from victims.

The U.S. Secret Service's Global Investigative Operations Center is leading the investigation into this case. Additional assistance was provided by the Homeland Security Investigations' El Camino Real Financial Crimes Task Force, Customs and Border Protection's National Targeting Center, Dominican Republic National Drug Directorate Sensitive Investigative Unit and Fugitive Task Force, U.S. Marshals Service, Drug Enforcement Administration, and the Justice Department's Office of International Affairs.

If convicted, Li and Zhang could face a maximum penalty of 20 years in prison for each count of conspiracy to commit money laundering and international money laundering. The Department of Justice's National Cryptocurrency Enforcement Team (NCET) is jointly prosecuting the case, taking action against the growing illicit use of cryptocurrencies and digital assets.

The announcement of these arrests underscores the importance of public vigilance against financial fraud and the need for individuals to educate themselves on such scams. U.S. Attorney Martin Estrada for the Central District of California urged people to protect their families by staying informed about financial fraud schemes like "pig butchering."

Anyone who has fallen victim to a cryptocurrency investment fraud is encouraged to report it to IC3.gov, providing as much relevant information as possible. The Justice Department's efforts to disrupt illicit revenue generation through fraud schemes continue, as demonstrated by the unsealing of charges against multiple individuals involved with the LockBit ransomware group and the Democratic People's Republic of Korea (DPRK or North Korea).