Arrest of Three Individuals for Bank Fraud and Money Laundering

Authorities in the United States have apprehended three men accused of defrauding over $10 million from New York banks and laundering it through offshore digital asset exchanges.

Fraudulent Scheme

The suspects, Zhong Shi Gao, Naifeng Xu, and Fei Jiang would recruit individuals to open accounts with different branches of New York banks. They would then transfer money between these accounts and file reports for unauthorized wire transfers.

As the banks investigated the transfers, they would credit the amount to the sender’s and receiver’s accounts, effectively doubling the money for a short time. The fraudsters would then quickly withdraw the funds from both accounts.

Laundering through Digital Assets

Once the cash was withdrawn, it would be converted into digital assets and transferred to foreign digital asset exchanges.

Legal Charges

The Department of Justice (DOJ) stated that the scam was conducted from 2018 to 2022, and the trio swindled over $10 million from nearly a dozen American financial institutions. Each individual was charged with bank fraud conspiracy, conspiracy to commit wire fraud affecting a financial institution, money laundering conspiracy, and aggravated identity theft.

DOJ Warning

The DOJ emphasized the severity of the charges, with the United States Attorney for the Southern District of New York, Damian Williams, warning that there will be consequences for those who think they can use cryptocurrency to hide their identities.

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