Trio Arrested by FBI for $10 Million Bank Fraud Involving Cryptocurrency

The Federal Bureau of Investigation has arrested three men for an elaborate $10 million bank fraud and money laundering scheme involving cryptocurrency.

Keypoints

• The FBI arrested 3 men for allegedly stealing $10 million from banks and laundering the funds through cryptocurrency.
• The trio duped banks by posing as victims of unauthorized money transfers, getting the banks to refund them money that was never lost.
• They used bank accounts opened by foreign nationals to facilitate the fraudulent transfers and withdrawals.
• The stolen money was quickly converted to crypto and moved through foreign exchanges to obscure the trail.
• The arrests underscore how crypto is being used for money laundering but law enforcement is cracking down.

Zhong Shi Gao, Naifeng Xu, and Fei Jiang allegedly stole the funds from nearly a dozen banks in the New York metro area between 2018 to 2022. According to authorities, the trio tricked the banks into handing over the money by pretending to be victims of unauthorized money transfers.

Specifically, they would initiate transfers from accounts they controlled and then report those transfers as fraudulent. The banks would then refund them the amounts, effectively doubling the deposited funds.

The men recruited foreign nationals from China and Taiwan to open U.S. bank accounts for them. This allowed them to deposit the illicitly obtained money and quickly withdraw it as cash or convert it to cryptocurrency.

Once converted to crypto, the funds were rapidly transferred to foreign exchanges in an attempt to cover their tracks. Overall, the men netted over $10 million through their socially engineered bank heist.

The arrests underscore how cryptocurrencies have become a prime vehicle for money laundering due to their pseudonymous nature. But they also demonstrate law enforcement’s growing ability to trace and seize illicit crypto funds.

“These charges should serve as a warning to fraudsters and cybercriminals who think they can turn to cryptocurrency to hide their identities – together with our partner agencies, we will find you and hold you accountable for your crimes,”
said U.S. Attorney Damian Williams.

The FBI collaborated with other agencies to apprehend the men. Each suspect faces charges of bank fraud conspiracy, conspiracy to commit wire fraud, money laundering conspiracy, and aggravated identity theft. If convicted, they could face up to 30 years in prison.