A Chinese national has been arraigned in the Central District of California following extradition from the Netherlands in connection with an alleged cryptocurrency investment scam that defrauded more than 174 American victims of $36.9 million.
Zheng Zhao, 44, was arraigned on October 23 on money laundering conspiracy charges carrying a maximum prison sentence of 20 years if convicted. The U.S. Department of Justice announced the extradition as part of its Cyber-Enabled Scam Initiative, with the Office of International Affairs coordinating with Dutch authorities to secure his arrest.
"This extradition should be a lesson to all those who seek to exploit vulnerable Americans from overseas," said Assistant Attorney General A. Tysen Duva of the Justice Department's Criminal Division.
Scheme Details and Fund Transfers
According to prosecutors, overseas participants contacted prospective victims through unsolicited social media interactions, telephone calls, text messages, and online dating services. After establishing trust, they directed victims to fraudulent digital asset investment platforms designed to mimic legitimate cryptocurrency exchanges.
Victims were told their investments were increasing in value while their money was allegedly diverted through a cross-border financial network involving U.S. shell companies, international bank accounts, and digital asset wallets. More than $36.9 million moved from accounts controlled by co-conspirators to a single account at Deltec Bank in the Bahamas.
Zhao and other participants allegedly arranged for the bank to convert funds into the stablecoin USDT and transfer the tokens to a digital asset wallet in Cambodia, where scam center leaders then distributed the funds regionally.
Co-Conspirators and Related Cases
Eight co-conspirators have pleaded guilty, including ShengSheng He and Jingliang Su, who admitted to conspiring to operate an unlicensed money transmitting business. He received a prison sentence of 51 months and Su received 46 months.
The case is part of broader law enforcement efforts targeting overseas scam networks. In January, Cambodian authorities extradited Prince Group head Chen Zhi to China in a separate investigation involving cryptocurrency fraud allegations. In June, Japanese authorities arrested alleged Prince Group associate Hu Shi in Osaka on suspicion of falsifying public records.
In September, the DOJ's Scam Center Strike Force, working with the U.S. Treasury Department, targeted Xinbi Guarantee, a Chinese-language online marketplace allegedly connecting operators with fraudulent service providers. Federal authorities restrained approximately $52 million in cryptocurrency in that action, bringing the Scam Center Strike Force's cumulative restrained funds to approximately $938 million.
