Crypto Launderer Daren Li Pleads Guilty in $73 Million Scam

Daren Li, a 41-year-old dual citizen of China and St. Kitts and Nevis, has pleaded guilty to conspiracy to commit money laundering in connection with a massive $73 million cryptocurrency scam. This scheme involved various fraudulent activities, including the notorious "pig butchering" scams, which have become increasingly prevalent in the crypto space.

Key Takeaways

• Daren Li faces a maximum sentence of 20 years in prison for his role in laundering funds from crypto scams.
• The scheme involved the use of shell companies and U.S. bank accounts to disguise the source of the funds.
• Li was arrested at Atlanta Airport in April 2024, with co-conspirator Yicheng Zhang arrested later in May.

Li's guilty plea was filed in a California federal court, where he admitted to directing associates to open U.S.-based bank accounts under the guise of shell companies. These accounts were used to receive funds from victims of various crypto scams, which were then converted into Tether (USDT) and distributed to wallets controlled by Li and his accomplices.

According to court documents, Li's operation was extensive, with one wallet receiving over $341 million in digital assets. The U.S. Department of Justice (DOJ) highlighted that Li's actions were part of a broader trend of increasing cryptocurrency fraud, which saw scammers collect approximately $679 million in the first half of 2024 alone.

The Pig Butchering Scheme

The term "pig butchering" refers to a type of scam where fraudsters build trust with victims over time, convincing them to invest large sums of money into fake cryptocurrency platforms. Initially, victims may be able to withdraw small amounts, encouraging them to invest even more before the scammers disappear with their funds.

Li's involvement in this scheme included:

1. Opening Shell Companies: Li instructed co-conspirators to establish U.S. bank accounts under fictitious companies to conceal the true nature of the funds.
2. Monitoring Transactions: He oversaw the receipt and execution of wire transfers from victims, ensuring the funds were quickly converted to digital currency.
3. Distributing Funds: The laundered money was then sent to various cryptocurrency wallets controlled by Li and his associates.

Legal Consequences

Li's guilty plea has significant legal implications. He is scheduled for sentencing on March 3, 2025, where he could face:

• Up to 20 years in prison
• Three years of supervised release
• A fine of $500,000 or double the gross proceeds from the offense, whichever is greater

Additionally, prosecutors have indicated that Li may be required to pay restitution to the victims, which could range from $4.5 million to the full $73 million lost in the scheme.

The Broader Impact of Crypto Scams

The rise of cryptocurrency scams, particularly those involving complex laundering schemes, poses a significant threat to investors. The DOJ has emphasized the need for vigilance among potential investors, warning against offers that seem too good to be true. As the cryptocurrency market continues to grow, so does the sophistication of scams targeting unsuspecting individuals.

Li's case serves as a stark reminder of the risks associated with cryptocurrency investments and the importance of regulatory oversight in this rapidly evolving financial landscape.

Sources

• Crypto scam launderer pleads guilty to role in $73M scheme, Cointelegraph.
• Crypto Scammer Pleads Guilty To Laundering $73M in DOJ Crackdown | CCN.com, CCN.com.
• Chinese Citizen Pleads Guilty in $73M Cryptocurrency 'Pig Butchering' Scheme, Cryptonews.
• Crypto fraudster pleads guilty of taking part in $73 million laundering scheme, FXStreet.
• Money Launderer Faces Up to Two Decades in U.S. Prison After Guilty Plea, CoinDesk.