Zheng Zhao, a 44-year-old Chinese national, was extradited from the Netherlands and arraigned in Los Angeles on October 23, 2026. US prosecutors allege he was part of a network operating scam centers in Cambodia that used counterfeit crypto trading websites to defraud at least 174 identified American victims of more than $36.9 million.
Zhao is charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison if he is convicted.
How the Alleged Scheme Operated
According to authorities, the operation deployed what law enforcement calls a "pig butchering" scheme. Scammers first built trust with targets through social media and dating apps before pitching investments.
Victims were directed to fake digital asset trading platforms that displayed fabricated gains. Authorities say victim funds were then routed through US shell companies before being sent to Deltec Bank in the Bahamas, where the money was allegedly converted into Tether (USDT). The stablecoin was then distributed to operators in Cambodia.
Broader Legal Action
Zhao was first charged in August 2025. Eight of his alleged co-conspirators have already pleaded guilty, with sentences ranging from 46 to 51 months in prison. Other defendants have been ordered to pay restitution in the millions of dollars.
This case is part of a larger US effort targeting fraud operations based in Southeast Asia. Authorities have noted that Cambodia's scam compounds are also linked to human trafficking and forced labor. Recent actions have included sanctions on individuals and entities connected to the scams, as well as crypto seizures valued in the billions.
Stablecoins and the Money Trail
The role of stablecoins in moving scam proceeds has drawn scrutiny from prosecutors. However, the alleged laundering route relied heavily on traditional financial infrastructure, with the cryptocurrency conversion occurring at the end of the transaction chain rather than at the beginning.
Zhao's next hearing is scheduled for November 30, 2026.
