Five Plead Guilty in Multi-Million Dollar Crypto Scam Targeting Americans
In a significant development in the fight against cryptocurrency fraud, five men have pleaded guilty to their involvement in a $36.9 million international scam that primarily targeted American victims. This operation is one of the latest in a series of government crackdowns on crypto-related scams, specifically those purportedly linked to the North Korean state-backed Lazarus Group.
Scam Operations Revealed
The U.S. Attorney’s Office for the Central District of California announced this week that the five defendants—Joseph Wong, Yicheng Zhang, Jose Somarriba, Shengsheng He, and Jingliang Su—used various social media platforms, messaging apps, and even dating services to establish trust with their victims. Once rapport was built, they urged these individuals to invest in what they claimed were lucrative cryptocurrency schemes.
The Department of Justice (DOJ) reported that the scammers misled victims by claiming their investments were generating significant returns, when in reality, the funds were being siphoned off as stolen profits rather than being invested.
The guilty pleas of these defendants underscore the persistent risks posed by international scammers leveraging advanced technologies to exploit unsuspecting victims, particularly in the crypto space.
How the Fraud Was Executed
The fraudulent activities were conducted through a web of shell companies and bank accounts. Somarriba and He established "Axis Digital," a front company, which was utilized to open an account with Deltec Bank in the Bahamas where they received victims’ funds. Su operated as a director, overseeing the conversion of the funds into Tether (USDT), a popular stablecoin. Wong led the money laundering aspect of the scheme, wiring the funds to international accounts, while Zhang managed two U.S. bank accounts involved in processing the illicit transactions.
The ultimate goal of this operation was clear: to funnel stolen money to leaders of scam centers based in Cambodia, a move that showcases the international dimension of this fraudulent scheme.
Potential Sentences and Ongoing Investigations
Zhang, who has been in custody since May 2024, and Wong both face the prospect of lengthy prison terms—up to 20 years—following their admissions of guilt related to money laundering conspiracy charges. The remaining defendants, Somarriba, He, and Su, could face up to five years in prison for their roles in operating an unlicensed money services business.
With these recent pleas, the total number of individuals who have pleaded guilty in connection to this sprawling crypto scheme now stands at eight, including previous guilty pleas from Daren Li and Lu Zhang for their involvement in money laundering operations.
Government’s Response to Crypto Crime
This case highlights the U.S. government’s ongoing battle against cryptocurrency-related crime, particularly as entities like the U.S. Treasury Department aim to stem the tide of fraud linked to North Korean cyber actors. Recently, the Treasury sought to cut off Cambodia-based Huione Group from accessing the American banking system, directing accusations toward the firm for facilitating significant money laundering operations tied to North Korea’s Lazarus Group.
The Department stressed the urgency of these measures, highlighting the echocation of hundreds of millions of dollars from ordinary Americans through cybercrime.
As the investigation continues, the Justice Department is likely to pursue additional actions to combat these threats in the crypto space, aiming to safeguard unsuspecting investors from future scams.
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