Department of Justice Charges Three Perpetrators of $10M Crypto Laundering Scheme

The US Department of Justice (DoJ) announced charges against three men behind a $10 million crypto laundering scheme. The alleged scammers are alleged to initiate transactions and later indicate they were unauthorized. 

The Federal Bureau of Investigation (FBI) agents involved in arresting the three men indicated that they would later convert the bank refunds into crypto. The accused are staring at sentences of 30 years as per the Thursday, November 16 announcement issued by the US attorney in the New York Southern District.

Justice Department Charges Three Men Behind $10M Laundering Scheme

The Justice Department confirmed charging Zhong Gao, alongside two compatriots, Fei Jiang and Naifeng Xu, with the crypto laundering scheme. The FBI’s assistant director, James Smith, decried the schemes for hurting the institutions and making it challenging to report dubious transfers. 

Smith hailed the FBI agents behind the arrests that he is optimistic of serving as a warning to individuals mulling engaging in bank fraud. He iterated the FBI’s preparedness to hold the perpetrators of crypto-related fraud accountable as outlined in the criminal justice system.

The apprehension of the trio involved a joint operation featuring FBI agents from the Oklahoma City office assisted by the agency’s officers drawn from the Asian and African Organized Crime unit. 

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Each defendant faces three counts: conspiracy to commit wire fraud, identity theft, and money laundering. The DOJ indicated that the matter is placed before the US District Judge Colleen McMahon and will see the trial of the three defendants.

The DOJ explained the scheme as one involving the enlisting of foreign nationals hailing from Taiwan and China though residents of the United States. The residents are asked to open the bank accounts and hand them to the three defendants. 

The alleged scammers utilize the accounts to execute transactions they would later allege they did not authorize. The banks credit the accounts that the trio quickly remits to foreign crypto exchanges and acquire or withdraw as cash.

US Attorney Damian Williams indicated that the charges should warn fraudsters and other cybercriminals seeking to convert cryptocurrencies as conduits to conceal their identities. He added that the federal agencies are watchful to locate and hold the perpetrator accountable for the crimes.

Williams’ devotion to eradicating crypto-related laundering schemes is evident in his career scorecard. He recently prosecuted the infamous OneCoin members, including the legal and compliance executive Irina Dilkinska. Williams played a prominent role in facilitating the arrest and trial of exFTX chief executive Sam Bankman-Fried alongside the co-conspirators.

US Regulatory Agencies Declare Fight Against Crypto-Related Money Laundering 

The arrest of the three men involved in $10M federal regulators took a heavier hand following the collapse of crypto exchange FTX and the arrest of Bankman-Fried. Such was evident in September when several US Senators joined their Senator Elizabeth Warren in supporting her Digital Asset Anti-Money Laundering Act. 

The proposed legislation would refine the scope of traditional banking regulations to the crypto firms involved in mining, validating, and service providing. The high-profile trial translated to a guilty finding in the seven fraud accounts. 

In early November, the SafeMoon founders were charged by the Justice Department for conspiring to orchestrate money laundering, securities, and wire fraud. The DoJ indicated that crypto has become a facilitative channel for rogue nations, fraudsters, and ransomware gangs to move billions of illicit finances and evade sanctions. 

The disclosure aligns with Senator Warren’s admission that crypto is utilized in funding illegal weapons projects and reaping profit from destructive cyberattacks.

 FBI’s devotion to weed out crypto laundering schemes coincides with the call by the  Commodities Futures Trading Commission (CFTC) chair Rostin Behnam for the lawmakers to expedite empowering the US regulatory agencies to avert the FTX-like collapse. He indicated that the CFTC suffers limited power to supervise the spot crypto markets unless manipulation is detected. As such, he decried the status quo that leaves the US susceptible to FTX-type events.

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