Three arrested in $10M bank fraud, crypto laundering scheme
The U.S. Attorney’s Office for the Southern District of New York and the FBI announced three arrests related to a $10 million scheme involving cryptocurrency on Nov. 16.
The authorities said that Zhong Shi Gao, Naifeng Xu, and Fei Jiang were arrested after participating in a scheme to steal millions of dollars from U.S. banks and financial institutions. The three individuals allegedly converted the stolen funds into cryptocurrency and moved the converted funds into foreign crypto exchanges.
Authorities have not yet disclosed the specific cryptocurrency exchanges involved in the handling of the stolen funds or the particular cryptocurrencies utilized in the scheme.
To carry out the scheme, the accused allegedly transferred funds between accounts that they controlled and then falsely reported those transactions as unauthorized. The banks then credited the supposedly stolen amount to those accounts, thereby doubling some balances.
The three accused individuals also recruited accomplices, especially foreign nationals from China and Taiwan who were temporarily living in the United States. The scheme was executed between roughly 2018 and 2022, targeting bank branches in New York City’s metropolitan area and other locations.
The Southern District of New York said that each individual faces charges that could carry up to 80 years in prison in total. Each has also been charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.
Enforcement wave
In a bid to protect the integrity of the financial system, U.S. authorities have recently made significant strides in tackling high-profile cryptocurrency-related criminal cases. Prosecutors in the Southern District of New York notably convicted FTX founder and former CEO Sam Bankman-Fried in a criminal trial that ended Nov. 2.
In October, the FBI charged six individuals in a multi-million dollar crypto money laundering scheme. In August, the Department of Justice reported that Bitfinex hackers Heather Morgan and Ilya Lichtenstein had pleaded guilty to money laundering charges.
Other noteworthy actions concern SafeMoon’s founders and executives, Mango Markets hacker Avraham Eisenberg, and various OneCoin associates.
