Prosecutors arrest two for laundering $73 million in 'pig butchering' scheme

Two people were arrested after law enforcement said they orchestrated a scheme that involved more than $73 million being laundered through U.S. financial institutions and eventually converted to Tether USDT +0.037% . 

Daren Li, 41, was arrested on April 12 at Atlanta's airport and Yicheng Zhang, 38, was arrested on Thursday in Los Angeles for their alleged involvement, the Justice Department said in a statement on Friday. An indictment charging the two was unsealed in a California court on Thursday.  

Li, Zhang and others allegedly controlled an "international syndicate" that laundered funds made through "pig butchering" crypto investment scams, according to the statement. Pig butchering scams involve scammers gaining victims' trust, convincing them to give them large amounts of money and then running off with it. Lawmakers and regulators have raised concerns over those types of scams over the past few months. 

The alleged scheme

Victims were persuaded into sending millions of dollars to U.S. bank accounts that were used to launder the proceeds. Then, the funds were sent to other domestic and international bank accounts, the DOJ said.

"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 said. "A cryptocurrency wallet involved in the scheme received more than $341 million in virtual assets."

Li and Zhang were charged with conspiracy to commit money laundering and six counts of international money laundering. They face a maximum penalty of 20 years in prison for each count. 

Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” said Deputy Attorney General Lisa Monaco in a statement. “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.