The FBI Has Arrested Three Men in Connection With an Alleged $10 Million Cryptocurrency Laundering Scheme

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Last Updated on November 17, 2023 by Bitfinsider

Three men have been accused with attempting to launder more than $10 million in cryptocurrencies. If proven guilty, the three may face up to 30 years in federal prison, according to a Thursday announcement from the United States Attorney for the Southern District of New York.

The scam was filed by the US Department of Justice against Zhong Shi Gao, Naifeng Xu, and Fei Jiang.

“Schemes like this harm institutions and make reporting suspicious transfers more difficult,” said FBI Assistant Director James Smith. “Today’s arrests serve as a warning to anyone considering engaging in bank fraud.” In the criminal justice system, the FBI will hold you accountable.”

The trio was caught as part of a combined investigation between the FBI’s Oklahoma City field office and its Asian and African Organized Crime unit.

Each defendant faces three charges: conspiracy to conduct bank and wire fraud, money laundering, and identity theft. The trial of Gao, Xu, and Jiang will be presided over by U.S. District Judge Colleen McMahon, according to the DOJ.

Enlisting foreign citizens from China and Taiwan living in the United States, creating bank accounts, and handing them over to the defendants was part of the plot. The suspected fraudsters would initiate transactions and then claim they were unapproved, causing banks to credit their accounts; the proceeds would then be taken as cash or used to acquire cryptocurrencies, which would then be promptly transferred to “foreign” cryptocurrency exchanges.

“These charges should serve as a warning to fraudsters and cybercriminals who think they can turn to cryptocurrency to hide their identities,” the U.S. Attorney’s Office stated. “Together with our partner agencies, we will find you and hold you accountable for your crimes.”

Williams is no stranger to cryptocurrency-related crimes, having recently prosecuted members of the infamous OneCoin, including its former Head of Legal and Compliance, Irina Dilkinska. Williams also played a key role in the demise, arrest, and prosecution of FTX founder Sam Bankman-Fried and his co-conspirators.

Since the collapse of FTX and the arrest of Bankman-Fried last year, federal officials have adopted a tougher stance toward the cryptocurrency business. In September, a bipartisan group of U.S. Senators backed Massachusetts Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act, which would apply regular banking laws to cryptocurrency organizations such as wallet providers, miners, and validators.

Bankman-Fried was found guilty of seven counts of fraud and conspiracy after a high-profile trial. The DOJ indicted SafeMoon’s founders earlier this month on counts of conspiracy to commit securities and wire fraud, as well as money laundering.

“Crypto is enabling rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks,” Senator Warren said in a statement earlier in the day.

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