Chinese National Pleads Guilty to Laundering Millions in Cryptocurrency Scam Proceeds

On November 12, 2024, Daren Li, a 41-year-old dual citizen of China and St. Kitts and Nevis, pleaded guilty to conspiracy to commit money laundering. Li admitted to orchestrating an elaborate international network that laundered over $73.6 million in proceeds from cryptocurrency investment scams targeting victims in the United States and abroad.

Li played a central role in a sprawling “pig-butchering” scam, in which scammers groomed victims over time to build trust before stealing their money. Victims were lured through messaging platforms like WhatsApp and Telegram, where fraudsters posed as legitimate cryptocurrency investors. They directed victims to fraudulent trading platforms, including spoofed websites designed to mimic legitimate ones like “CoinZoom.” Victims, believing they were earning significant returns, poured funds into these platforms. One victim alone, referred to as “Victim 1,” in court filings transferred $1.5 million between May and August 2022, thinking they were growing their cryptocurrency investments. When Victim 1 attempted to withdraw funds, the fraudulent platform demanded additional payments for “taxes and fees,” at which point the victim realized they had been scammed.

Li and his co-conspirators developed a sophisticated laundering network involving 74 shell companies, fake business accounts, and cryptocurrency exchanges. Shell companies like CMD Export and Import and Crestview Services, Inc. were registered in the US but had no legitimate business activities, serving solely to receive and transfer stolen funds. Over $35 million in victim funds flowed into one Bahamas-based account (Bahamas Account #2), opened by a Los Angeles-based co-conspirator with financial support from Li. These funds were then converted into USDT. Li’s cryptocurrency account received $4.5 million in fraud proceeds, which he later funneled to other accounts controlled by the syndicate. Throughout the scheme, Li used encrypted messaging services like Telegram, operating under aliases like “KG71777” and “KK,” to coordinate with co-conspirators, manage funds, direct transactions, and oversee shell company activities.

The U.S. Secret Service (USSS) uncovered extensive evidence tying Li to the scheme. Telegram chats from an iPhone seized from a co-conspirator detailed Li’s involvement, including his role as a leader in directing the syndicate’s financial operations. 

Through the use of blockchain intelligence, agents identified victim funds flowing into accounts controlled by Li. Additionally, Li’s frequent logins from Cambodia to his Li's account at a global VASP coupled with connections to the spoofed trading platforms, further tied him to the fraud.

Li’s arrest on April 12, 2024, at Hartsfield-Jackson Atlanta International Airport, was the result of an extensive investigation involving domestic and international agencies. The USSS, Homeland Security Investigations, and law enforcement partners in Cambodia and the Dominican Republic played pivotal roles in dismantling the network. “This investigation demonstrates the power of international cooperation in combatting transnational crime,” said Acting Assistant Director Michael Ball of the USSS, in the press release. 

The Justice Department highlighted the devastating impact of financial fraud on victims, many of whom suffered life-altering losses. U.S. Attorney Martin Estrada warned, “Financial criminals and the money launderers who enable them wreak untold harm, ruining lives in the process. Investors should remain vigilant against promises of quick riches.”

Li faces a maximum penalty of 20 years in prison, with sentencing scheduled for March 3, 2025.

If you or someone you know has fallen victim to a cryptocurrency scam, report it to the FBI’s Internet Crime Complaint Center (IC3.gov) to aid in ongoing investigations and report to Chainabuse.com.  The case highlights the importance of international collaboration in stopping bad actors and protecting victims of fraud.