Federal law enforcement authorities have arrested three men accused of scamming millions from US banks and financial institutions and then moving the stolen money into foreign cryptocurrency exchanges.
The U.S. Department of Justice (DOJ) says Zhong Shi Gao, Naifeng Xu and Fei Jiang recruited individuals, often foreign nationals 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 that the transactions were unauthorized, according to the DOJ. In response, the banks would temporarily credit the amount of the money wired. The perpetrators would then allegedly withdraw the credited funds or convert them into cryptocurrency, which they would funnel into foreign crypto exchanges before the banks found out that the reports were fraudulent.
As a result, the DOJ claims Gao, Xu, Jiang and other members of the scheme were able to withdraw nearly double the money initially deposited and leave the bank accounts with negative balances.
In a statement, U.S. Attorney Damian Williams says that the scheme stole over $10 million from nearly a dozen US banks and financial institutions.
“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.”
FBI Assistant Director in Charge James Smith says that schemes such as the one committed by Gao, Xu and Jiang harm institutions and make it more difficult to report suspicious transfers.
All three are facing charges of bank fraud conspiracy, conspiracy to commit wire fraud affecting a financial institution, money laundering conspiracy and aggravated identity theft.