Four US nationals have been indicted for participating in an illegal scheme that netted them more than $80 million through cryptocurrency investment scams.
The defendants – Lu Zhang, 36, of Alhambra, California; Justin Walker, 31, of Cypress, California; Joseph Wong, 32, Rosemead, California; and Hailong Zhu, 40, Naperville, Illinois – charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering.
The US Department of Justice (DoJ), which announced the arrests of Zhang and Walker in connection with the fraudulent operation, said the quartet opened shell companies and bank accounts to carry out the scams in pig slaughter, transfer of unearned funds to domestic and international financial entities.
If convicted, Zhang and Walker face a maximum sentence of 20 years in prison. Their alleged accomplice remains at large.
Cook AI-Powered Threats with Zero Trust – Webinar for Security Professionals
Traditional security measures just won’t cut it in today’s world. It’s time for Zero Trust Security. Secure your data like never before.
“The overall scheme to defraud the related pork slaughter syndicate involved at least 284 transactions and resulted in over $80 million in victim losses,” the DoJ said. SAYS. “More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.”
The enforcement action comes as a Nigerian national named Eze Harrison Arinze sentenced up to three years in prison for his managerial role pig slaughter scams and defrauded 34 victims in 13 countries, leading to $592,000 in losses.
Late last month, the US DoJ also Office has partnered the seizure of nearly $9 million worth of Tether traced to cryptocurrency addresses allegedly associated with an organization based in Southeast Asia that exploited more than 70 victims by cheating the pig.
Pig slaughter falls under a category called romance-investment scams, where people are targeted through dating apps under fictitious identities to gain their trust and trick them into investing their money in seemingly legitimate and profitable businesses, often promising a high return on investment within a short period of time.
“After persuading the victim to invest, the scammers collect the funds, often using digital payment platforms or cryptocurrencies to make tracking more difficult,” Trend Micro SAYS in a report detailing the scam.
“Once they receive enough money from their victims, or once the victims try to withdraw funds from the account, the scammers suddenly become unreachable, or the brokerage platform has a problem to transfer funds. new identities, making it difficult for victims to recover their lost funds.”
One of the emerging trends in the space involves the use of group chats, which shows that cyber criminals are adapting and refining their strategies to make them more effective.
In these cases, would-be victims are added to a fake investment chat group that they control. When the target expresses interest in investing in cryptocurrencies, the conversation is transferred to a one-on-one chat, where they are introduced to a fake broker platform and persuaded to transfer their funds to the service.
According to the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center (IC3) reportcryptocurrency investment scams led to unprecedented losses totaling $2.57 billion in 2022, registering a 183% increase from 2021.
“A significant portion of these phone numbers can be traced back to leaked databases containing personal information,” the cybersecurity firm said. “More than half of the numbers added to fake group chats were found in such databases, indicating that scammers can use the leaked information to find their next victims.”