Bitcoin News Today:

Shengsheng He, a California man, was sentenced to 51 months in federal prison for his role in laundering nearly $37 million in stolen cryptocurrency funds through a global investment scam. The funds were funneled through his Bahamas-based company, Axis Digital Limited, and converted into Tether (USDT) stablecoin before being transferred to wallets controlled by the scam operators. The scam, which relied on unsolicited communications and social engineering to build trust with victims, was part of a larger operation based in Cambodia, where so-called “pig butchering” scams are carried out in high-volume digital fraud centers. According to Chainalysis, these types of scams generated $9 billion in illicit proceeds in 2024, with victims believing they were investing in legitimate digital assets while their funds were siphoned away.

Federal prosecutors emphasized that the scheme involved the use of shell companies and overseas accounts to obscure the source of the funds. Once victims sent money, the funds were consolidated into a single account at Deltec Bank in the Bahamas and then converted to USDT. The DOJ highlighted that He’s actions were part of a broader crackdown on crypto-related fraud, with recent enforcement actions including the seizure of $201,000 in cryptocurrency linked to Hamas, the return of $7.1 million to victims of a $97 million oil and gas fraud, and the takedown of domains tied to Russian-run exchanges accused of processing over $800 million in illicit transactions.

The case against He is a significant development in the ongoing effort to combat crypto fraud and money laundering, with eight co-conspirators having already pleaded guilty. Among them were He’s business partners, including Jingliang Su, a Chinese national who played a role in converting and transferring the stolen funds. The sentencing underscores the growing ability of U.S. law enforcement agencies to trace and recover illicit assets in the digital space, particularly in the context of international financial crime. The DOJ has increasingly focused on the regulatory and enforcement challenges posed by decentralized finance and offshore exchanges, aiming to disrupt the infrastructure that enables large-scale fraud.

The case also highlights the growing use of Tether (USDT) in illicit financial flows. Tether, one of the most widely used stablecoins, has been the subject of speculation and scrutiny regarding its reserves and governance. Despite recent claims from Tether CEO Paolo Ardoino that the firm continues to invest in safe assets like Bitcoin and gold, the company has faced persistent questions about its transparency and reserve composition. Meanwhile, the broader crypto industry remains vulnerable to phishing scams and other forms of cybercrime, as evidenced by a recent surge in losses attributed to phishing attacks in August, with over $12 million stolen from victims through deceptive communications and EIP-7702 exploits on the Ethereum network.

The enforcement actions taken by the DOJ and international agencies, such as the Seoul Metropolitan Police Agency, demonstrate the increasing coordination and capability of law enforcement to trace and dismantle global financial crime networks. In a separate case, South Korean investigators, supported by Chainalysis’ blockchain intelligence tools, successfully tracked and extradited the leader of a hacking ring that stole 39 billion won from 258 high-profile victims. These efforts are part of a larger trend in which law enforcement is leveraging blockchain analytics to combat financial crimes that leverage the anonymity and global nature of digital assets. As the DOJ continues its crackdown, the message is clear: while the crypto space offers new opportunities for innovation, it also demands rigorous oversight and enforcement to protect investors and maintain public trust.

Source:

[1] California Man Sentenced in $37M Crypto Scam Amid DOJ Crackdown (https://decrypt.co/338558/california-man-sentenced-crypto-scam-doj-crackdown)

[2] Here's How Much Crypto Investors Lost to Phishing Scams in August (https://www.mexc.com/fa-IR/news/heres-how-much-crypto-investors-lost-to-phishing-scams-in-august/88240)

[3] Tether CEO refutes claims that the firm sold Bitcoin and bought gold (https://cryptorank.io/news/feed/44a4d-tether-ceo-refutes-claims-that-the-firm-sold-bitcoin-and-bought-gold)

[4] Seoul Police Crack International Hacking Ring (https://www.chainalysis.com/blog/seoul-police-crack-international-hacking-ring-september-2025/)