Crypto Scam: $73 Million Laundered Through Shell Companies
One of the significant evils of cryptocurrency is scams, fake cryptocurrency exchanges, fake ICOs, and child escorting. Recently, the US Department of Justice was able to bust a money laundering syndicate hiding millions of dollars.
The choice of this subject matter is strategic. Crypto Accountants explain in this blog post. Read on to learn the aspects that are essential to investors as well as the authorities.
Unmasking the Pig Butchering Scam!
The case focuses on two Chinese citizens, Daren Li, 41, and Yicheng Zhang, 38. They were arrested for money laundering at least $73 million received from “pig butchering” scams. These manipulative crypto investment schemes involve:
Building Trust: These fraudsters engage their targets and take their time to “stalk” the pig day after day. They paint a picture of exaggerated outsized returns with minimal risk.
Sudden Theft: Once the victims have been successfully lured into trusting the fraudsters, the swindlers swiftly make away with the cash. It is similar to the process of “butchering the pig”, where the pig in this context is the money.
Shell Companies: Obfuscating the Trail
Li and Zhang allegedly conducted an investment scam to create shell companies with a bank account to wash the embezzled money. To invest their money into a better stock, they probably transferred their investment to these accounts in the process, relieving their money into the hands of the fraudsters.
Traditional Finance Integration
It was not exclusively crypto-based, although cryptocurrency played a massive part in the process.
According to the report, the laundered money passed through the US financial systems. However, the assertion that there is a clear distinction between traditional financial systems and the crypto world is a fallacy.
Tether (USDT): A Tool for Obfuscation?
The indictment implies that the laundered money was put into Tether (USDT), the cryptocurrency described as the stablecoin. This conversion might be an effort to layer the bending process to obscure the funds' source.
Massive Scale Points to Larger Problem
The indicted man embezzled $73m; however, only one of the wallets involved in the scheme received more than $341m worth of virtual currencies.
This implies that the actual fraud could be even more extensive, underlying that cyber fiat currency fraud is a rapidly growing component of financial fraud.
DOJ Steps Up to Disrupt the Ecosystem
The arrests and charges that the DOJ has conducted are conspiracy to commit money laundering charges and international money laundering, which shows the organs’ strive to dismantle the crypto cybercrime system.
This case, in particular, also believes that law enforcement is on the prowl for these criminals.
Investor Beware: Protecting Yourself from Crypto Scams
This case is something that crypto enthusiasts should consider when dealing with cryptocurrencies. Here's how you can stay safe:
Scrutinize Investment Opportunities
Most people who find themselves being approached with such offers are wary of them as they often have high expected rates of return.
Research is Key
It is very important to take time and do your homework when faced with an unfamiliar platform or person to deal with in the business. Pay enough attention to the licenses in circulation and also seek user reviews.
Don't Fall for the Emotional Manipulation
It is custom that swindlers appeal to the emotional side to compel an individual to make quick decisions. Move on if you get uncomfortable.
It is reasonable to make inevitable mistakes, especially in areas you have never ventured into.
Bottom Line: Vigilance is Key!
Even though many companies have added cryptocurrency as a payment method, this market remains rather sensitive to unlawful actions. However, an exercise like this DOJ bust shows a preventive perspective in law enforcement.
Investors should tread with care. One must do homework regarding the platforms one wants to invest in and ensure one deals with trusted and reputed platforms.
Disclaimer: This is just an informational blog post. Please do not connect it with any investment advice as a reference of proof for the court of law. For crypto tax, compliance, and due diligence-related information, contact the Crypto Accountants.