Five Men Plead Guilty in $36.9 Million Crypto Scam Targeting Americans

Five men have pleaded guilty to their roles in a $36.9 million international crypto scam that targeted Americans and funneled the proceeds to a scam operation in Cambodia. The defendants, Joseph Wong, Yicheng Zhang, Jose Somarriba, Shengsheng He, and Jingliang Su, used various tactics to build trust with victims before convincing them to invest in fake crypto ventures. The victims’ funds were never invested and were instead stolen outright. The scammers falsely claimed the investments were gaining value to keep the victims engaged.

The laundering operation was sophisticated and multinational. Somarriba and He created a shell company called “Axis Digital” and opened a Deltec Bank account in the Bahamas to receive the funds. Su played a key role in converting stolen money into USDT, while Wong managed a laundering network that moved funds through international bank accounts. Zhang operated two US-based bank accounts to process the illegal proceeds. The stolen assets were eventually sent to the orchestrators of the scam based in Cambodia.

Zhang and Wong now face up to 20 years in prison for conspiracy to launder money, and are among the most severely charged. The remaining three men could face up to five years each for conspiring to run an unlicensed money services business. Su is scheduled for sentencing on Nov. 17. These developments bring the total number of guilty pleas in connection with the scam to eight, including previous admissions of guilt from Daren Li and Lu Zhang for similar charges.

This case highlights the increasing efforts by US authorities to combat crypto-related crime. The US Treasury Department is also escalating its efforts to combat crypto-related crime linked to Asia. Officials proposed sanctions against the Cambodia-based Huione Group after accusing it of facilitating money laundering for North Korea’s Lazarus Group. The Treasury’s Financial Crimes Enforcement Network (FinCEN) recommended banning US financial institutions from providing correspondent or payable-through accounts to Huione, due to its role as a facilitator of malicious cyber activities.

In an apparent response to enforcement actions, one of Huione’s affiliates, Haowang Guarantee, reportedly had its Telegram communications channel shut down. Despite this, crypto analytics firm TRM Labs identified behavioral and transactional links between Haowang Guarantee and another Telegram-based entity, Xinbi. This indicates the complex and interconnected nature of crypto-related crime networks.

In Australia, authorities charged four people after an 18-month investigation into a $190 million AUD ($123 million USD) crypto laundering scheme that allegedly operated through a cash-in-transit security company. The Australian Federal Police worked alongside the Queensland Joint Organized Crime Taskforce, and revealed that the suspects used the armored vehicle division of a security business to disguise illegal activity as legitimate financial operations. The investigation involved 70 officers across federal and state agencies, and began in December of 2023. So far, it led to the freezing of $13.6 million worth of suspected criminal assets in Queensland and New South Wales.

The laundering operation reportedly involved mixing legitimate business revenue with illicit cash deposits from suspected criminals. These funds were then funneled through a web of front operations, including a promotional sales company, a classic car dealership, and cryptocurrency exchanges. Authorities tracked one person who allegedly laundered $9.5 million over 15 months, which helped them to uncover the whole network. The crypto funds were ultimately redistributed to beneficiaries either in digital assets or through the associated businesses.

Blockchain’s decentralized and pseudonymous nature offers criminals new avenues for laundering money, even though it provides transparency that law enforcement can take advantage of to trace illegal activity. Criminals did this by developing increasingly advanced tactics, like using mixers, DeFi protocols, and cross-chain bridges to obscure transactions and evade detection. Beyond digital deception, crypto-related crime is increasingly manifesting in the physical world. Moroccan police recently arrested a man linked to multiple crypto-related kidnapping attempts, including one targeting the family of Paymium CEO Pierre Noizat. In another incident, Ledger co-founder David Balland was kidnapped in France and held hostage before being rescued.