Three men have been charged with laundering over $10 million in cryptocurrency. If found guilty, the three face a maximum of 30 years in federal prison, according to an announcement from the United States Attorney for the Southern District of New York said on Thursday.
The U.S. Department of Justice charged Zhong Shi Gao, Naifeng Xu, and Fei Jiang with the scheme.
“Schemes like this harm institutions and make it tougher to report suspicious transfers,” FBI Assistant Director James Smith said. “The arrests today serve as a warning to anyone thinking of attempting to engage in bank fraud. The FBI will hold you accountable in the criminal justice system.”
The trio were apprehended through a joint operation between the FBI’s Oklahoma City field office and the bureau’s Asian and African Organized Crime squad.
Each defendant is charged with three counts, including conspiracy to commit bank and wire fraud, money laundering, and identity theft. According to the DOJ, U.S. District Judge Colleen McMahon will handle the trial of Gao, Xu, and Jiang.
The scheme included enlisting foreign nationals from China and Taiwan living in the United States, opening bank accounts, and turning them over to the defendants. The alleged scammers would create transactions and then claim the transactions were unauthorized, leading the banks to credit their account; the funds would then be withdrawn as cash or used to purchase cryptocurrency and quickly moved to “foreign” cryptocurrency exchanges.
The Department of Justice has not yet responded to Decrypt’s request for comment.
“These charges should serve as a warning to fraudsters and cybercriminals who think they can turn to cryptocurrency to hide their identities,” U.S. Attorney Damian Williams said. “Together with our partner agencies, we will find you and hold you accountable for your crimes.”
Williams is no stranger to crimes involving cryptocurrency, having prosecuted members of the infamous OneCoin—including its former Head of Legal and Compliance, Irina Dilkinska—last week. Williams was also a prominent figure in the collapse, arrest, and trial of FTX founder Sam Bankman-Fried and his co-conspirators.
Federal regulators have taken a heavier hand with the cryptocurrency industry since the collapse of FTX and the arrest of Bankman-Fried last year. In September, a coalition of U.S. Senators joined Massachusetts Senator Elizabeth Warren in supporting Warren’s Digital Asset Anti-Money Laundering Act, which would apply traditional banking regulations to cryptocurrency companies, including wallet providers, miners, and validators.
After a high-profile trial, Bankman-Fried was found guilty of seven fraud and conspiracy charges. Earlier this month, the DOJ indicted the founders of SafeMoon on charges of conspiracy to commit securities and wire fraud and 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 previously said in a statement.
Edited by Ryan Ozawa.
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Source: https://decrypt.co/206413/crypto-laundering-scheme-bank-transactions-china-taiwan
