$10M bank fraud, ‘crypto’ laundering scheme could land 3 people 80 years in US prison

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United States authorities have arrested three men who are accused of defrauding over $10 million from New York banks and laundering it through offshore digital asset exchanges.

The three suspects—31-year-old Zhong Shi Gao from New York, 37-year-old Naifeng Xu from Oklahoma, and 41-year-old Fei Jiang from New York—would recruit other Taiwanese and Chinese nationals to open accounts with New York banks in different branches. They would transfer a sum of money from one account to another and then file a report for unauthorized wire transfers.

The banks would credit the amount to the sender’s and receiver’s accounts as they investigated the mishap. This would double the money for a short time, and the fraudsters would quickly withdraw the funds from both accounts.

Once they withdrew the cash, they would convert it into digital assets and transfer the funds to foreign digital asset exchanges.

According to the Department of Justice (DOJ), the three conducted their scam from 2018 to 2022. They swindled over $10 million from nearly a dozen American financial institutions.

A grand jury in the Southern District of New York charged each of the three with one count of bank fraud conspiracy and one count of conspiracy to commit wire fraud affecting a financial institution. The two crimes carry a maximum of 30 years behind bars each.

It also charged them with one count of money laundering conspiracy each, which carries a maximum of 20 years in prison. The fourth count, aggravated identity theft, could land them in jail for a maximum of two years.

The DOJ also wants the three to forfeit all proceeds from their crimes.

“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,” commented Damian Williams, the United States Attorney for the Southern District of New York.

Watch Callahan, MaGruder, Lee, and Reinhardt: Probing criminal acts