U.S. Justice Department Dismantles Crypto Fraud Ring Laundering $36.9 Million

The U.S. Justice Department has successfully dismantled an international crypto fraud ring, securing guilty pleas from five individuals involved in laundering over $36.9 million from defrauded investors. The scheme, which targeted victims in the U.S., utilized a complex network of shell companies, offshore accounts, and digital asset wallets to siphon funds from unsuspecting investors.

The Department of Justice (DOJ) announced that three California residents—Joseph Wong, Jose Somarriba, and Shengsheng He—along with two Chinese citizens, Yicheng Zhang and Jingliang Su, have admitted to their roles in the conspiracy. The fraudsters operated by building trust through social media interactions, text messages, phone calls, and online dating sites. Once contact was established, they persuaded victims to transfer money under the false pretense of investing in appreciating digital assets. The funds were then transferred to accounts controlled by the perpetrators, with over $36.9 million moved to a Deltec Bank account in the Bahamas registered under Axis Digital Limited.

Somarriba and He co-founded Axis Digital and opened the Deltec account, with Su later joining as a director. They instructed the bank to convert the stolen money into USDT, which was then sent to a wallet controlled by individuals in Cambodia. These funds were ultimately forwarded to unnamed people running “scam centers” in the region. Meanwhile, Wong managed a Los Angeles-based network of money launderers who created shell companies, opened U.S. bank accounts, and wired funds abroad. Zhang also opened and managed two of these accounts.

Wong and Zhang each face a maximum of 20 years in prison for money laundering conspiracy, while Somarriba, He, and Su admitted to conspiracy to operate an unlicensed money services business, which carries a maximum penalty of 5 years. They join three others who have previously pleaded guilty, including Daren Li, a former resident of Cambodia and the United Arab Emirates, who has been in U.S. custody since April 2024. Another associate, Lu Zhang, a Chinese national who managed a U.S.-based asset concealment network, pleaded guilty to money laundering conspiracy on May 13, 2024.

This crackdown follows a report revealing that Americans over the age of 60 were the most affected by crypto-related fraud, with over 140,000 complaints linked to digital assets recorded last year, leading to over $9 billion in losses. The DOJ's successful prosecution of this international fraud ring underscores the growing need for vigilance and regulatory oversight in the crypto investment landscape.