December 31, 2023

Four indicted for roles in cryptocurrency investment scheme

The US Department of Justice recently unsealed a seven-count indictment charging Lu Zhang, Justin Walker, Joseph Wong, and Hailong Zhu in connection with allegations that they laundered millions of dollars in victim funds in connection with their alleged participation in a cryptocurrency investment scheme as well as other fraudulent schemes.  The DOJ reported that Zhang and Walker were arrested and made their initial appearances in federal court on December 13, 2023.  However, all four defendants were charged with conspiracy to commit money laundering, concealment money laundering and international money laundering for their roles in the scheme.

According to the DOJ, the overall fraud resulted in more than $80 million in victim losses, and the defendants reportedly collected more than $20 million in direct deposits from victims by engaging in a scheme known as “pig butchering.”  The DOJ described pig butchering as a fraudulent scheme in which the scammer encounters victims through a dating site or social media (often through an unsolicited message or call) in order to initiate a relationship with the victim and gain their trust in order to convince them to make business investments using cryptocurrency.  The DOJ reported that victims of the scheme are often directed to make financial investments in cryptocurrency platforms and applications operated by other participants in the scheme who, upon receiving the victims’ funds, falsely reflect significant gains on the platform to induce them to make additional investments.  Victims of this scam are ultimately unable to withdraw or recover their money from these platforms causing many victims to suffer significant losses.

The DOJ also encourages anyone who might be a victim of this type of scheme to report it to, to reference “Pig Butchering PSA,” and to share as many details as possible.  Victims are also encouraged to maintain copies of all communications and financial transactions related to the scheme.

DOJ Press Release | Unsealed Indictment