An indictment was unsealed in the Central District of California on Friday charging two individuals for their alleged roles in a cryptocurrency money laundering scheme that scammed victims out of tens of millions of dollars.

Daren Li, a 41-year-old holding dual citizenship of China and St. Kitts and Nevis, and Yicheng Zhang, a 38-year-old Chinese national residing in Temple City, California, were arrested for allegedly managing a network that laundered proceeds from cryptocurrency investment scams, known as "pig butchering" scams.

The scheme, the US Department of Justice (DoJ) said, lured unsuspecting victims into transferring sums totalling over $73 million to US bank accounts controlled by numerous shell companies.

This network of money launderers transferred the ill-gotten gains to domestic and international accounts, eventually converting them into the virtual asset Tether (USDT). One cryptocurrency wallet involved in the scheme in particular received $341 million in virtual assets.

According to prosecutors, Li and Zhang orchestrated the laundering operations, instructing co-conspirators to open bank accounts under various shell company names. Once victims deposited funds into these accounts, the proceeds were transferred overseas to accounts at Deltec Bank in The Bahamas, with one account allegedly operated with Li's assistance. The funds were then converted into cryptocurrency and sent to virtual asset wallets, including at least one under Li's control.

Brian Lambert of the US Secret Service said that “Complex financial fraud schemes such as pig butchering present a clear and present threat to the financial infrastructure of the United States," emphasising the urgency of combating such predatory activities.

If convicted, Li and Zhang face up to 20 years in prison for each of the seven counts against them, including conspiracy to commit money laundering and six substantive counts of international money laundering.

The case was investigated by agencies including the US Secret Service and Homeland Security Investigations. It is being prosecuted jointly by the Justice Department's National Cryptocurrency Enforcement Team and the US Attorney's Office for the Central District of California.

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