Federal law enforcement authorities have arrested three men accused of defrauding millions from U.S. banks and financial institutions and then moving the stolen money to foreign cryptocurrency exchanges.
The US Department of Justice (DOJ) says Zhong Shi Gao, Naifeng Xu and Fei Jiang recruited individuals, often foreigners from China and Taiwan temporarily living in the US, to open accounts at various banks.
The trio would then take control of the bank accounts, initiate fund transfers between these accounts and then file fraudulent reports claiming the transactions were unauthorized, the DOJ said. In response, the banks would temporarily credit the amount of money transferred. The perpetrators would then withdraw the credited funds or convert them into cryptocurrency, which they would route to foreign crypto exchanges before the banks discovered the reports were fraudulent.
As a result, the DOJ alleges that Gao, Xu, Jiang and other members of the scheme were able to withdraw almost double the initial deposited funds and leave the bank accounts with negative balances.
In a statement, U.S. Attorney Damian Williams said the scheme stole more than $10 million from nearly a dozen U.S. banks and financial institutions.
“These charges should serve as a warning to fraudsters and cybercriminals who believe they can use cryptocurrency to hide their identities – together with our partner agencies, we will find you and hold you accountable for your crimes.”
FBI Assistant Director James Smith says schemes like those of Gao, Xu and Jiang harm institutions and make it harder to report suspicious transfers.
All three are charged with conspiracy to commit bank fraud, conspiracy to commit bank fraud involving a financial institution, money laundering conspiracy and aggravated identity theft.
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