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A Chinese dual citizen, Daren Li, recently pleaded guilty to money laundering millions of dollars linked to various crypto investment scams in the United States, marking a milestone in the Justice Department’s ongoing battle against international crypto fraud.
Crypto Money Laundering Scheme Exposed
According to a plea agreement filed on November 11 in a California federal court, the 41-year-old admitted to operating a sophisticated scheme that laundered $73 million through U.S.-based shell companies and manipulated global banking channels. The scams, running from August 2021 to April 2023, largely targeted victims through schemes like “pig butchering,” a form of romance scam where fraudsters groom victims into investing in fake crypto projects.
Court filings reveal that Li orchestrated an extensive operation where he directed accomplices to open bank accounts under shell companies in the U.S., ultimately making it difficult for authorities to trace the origin of funds. Once funds were funneled into these accounts by unsuspecting victims, the money was converted into Tether (USDT) and distributed to wallets managed by Li and his associates. One wallet tied to the operation reportedly processed over $341 million in crypto transactions.
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Complex Network of Shell Companies and International Accounts
In a statement, Nicole M. Argentieri, Head of the Justice Department’s Criminal Division, noted that Li’s operation extended far beyond U.S. borders. Through an intricate web of shell companies and foreign bank accounts, the money laundering network disguised not only the destination but also the scale of the funds involved.
Evidence presented in court showed that approximately $73.6 million flowed directly into bank accounts associated with Li’s scheme, while at least $59.8 million was transferred via U.S.-based shell companies specifically created to mask illicit crypto activities.
Following a coordinated law enforcement effort, Li was arrested at Atlanta Airport in Georgia on April 12. His suspected co-conspirator, Yicheng Zhang, was also apprehended in Los Angeles in May. Initially, Li faced multiple charges, including conspiracy to money laundering and six counts of international money laundering, each carrying a potential 20-year prison sentence.
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Upcoming Sentencing and Potential Restitution
Having pleaded guilty, Li now faces a maximum sentence of 20 years in prison, with additional fines totaling up to $500,000 or twice the offense’s gross proceeds. Judge R. Gary Klausner has scheduled a sentencing hearing for March 3, 2025, during which Li may also be required to pay full restitution to his victims.
Prosecutors estimate this restitution could range between $4.5 million and $73 million, depending on the final court determination. The Justice Department continues to address such crypto-related fraud cases, underscoring its commitment to cracking down on transnational cybercrime.
