Fraudulent Cryptocurrency Scheme
In a significant legal development, five individuals have admitted their involvement in a fraudulent cryptocurrency scheme that swindled nearly $37 million from American victims. This international operation, which is believed to have funneled its proceeds to a cybercrime center in Cambodia, utilized an array of false companies and U.S. bank accounts to defraud unsuspecting investors. According to the U.S. Attorney’s Office for the Central District of California, this crackdown exemplifies the government’s ongoing efforts against cryptocurrency fraud and associated money laundering activities, particularly those tied to the North Korean government’s Lazarus Group.
Modus Operandi of the Defendants
The defendants—Joseph Wong, Yicheng Zhang, Jose Somarriba, Shengsheng He, and Jingliang Su—devised clever tactics to lure victims into their web. They used social media platforms, messaging apps, and dating services to build trust through messaging and phone calls, ultimately persuading individuals to invest in their fraudulent crypto schemes. The Department of Justice emphasized that these scammers misled victims into believing their investments were growing, while in reality, the money collected was never genuinely invested but rather stolen.
Geographical Dispersion and Operational Structure
The five men are geographically dispersed across countries including Spain, China, and Turkey. They orchestrated their operations through a shell company named “Axis Digital”, which was co-founded by Somarriba and He. The duo established a bank account with Deltec Bank in the Bahamas to facilitate the illicit management of victim funds. Wong directed a money laundering network that transferred stolen funds to various international bank accounts, while Su was responsible for converting these funds into Tether (USDT). Zhang managed two U.S. bank accounts specifically for processing these illegal transactions, with all proceeds eventually reaching leaders of the scam in Cambodia.
Accountability and Legal Consequences
In terms of accountability, both Zhang and Wong, who are facing charges related to money laundering conspiracy, could be sentenced to 20 years in prison. The other defendants are at risk of receiving sentences of up to five years for operating an unlicensed money services business. Su has been in custody since late 2024 and is set for sentencing on November 17. To date, a total of eight individuals have pleaded guilty in connection with this extensive crypto scam, with Daren Li and Lu Zhang previously admitting guilt on money laundering charges in the prior year.
Government Action Against Cybercrime
In related news, the U.S. Treasury Department is taking steps to restrict the Cambodia-based Huione Group‘s access to the American financial system. This action arises from accusations that Huione has been instrumental in facilitating money laundering linked to North Korea’s Lazarus Group, which is notorious for stealing vast sums from U.S. citizens. The Treasury’s Financial Crimes Enforcement Network proposed measures to prevent financial institutions from engaging with accounts related to Huione as of May 1. Huione Group has been described as a prime location for cybercriminals, having allegedly enabled the theft of billions from American individuals. Furthermore, recent investigations by crypto analytics firm TRM Labs revealed ongoing connections between Huione and other entities, suggesting attempts to circumvent the imposed restrictions.
