Chinese National Extradited to U.S. to Face Allegations in $36.9 Million Crypto Scheme
Zheng Zhao, a 44-year-old Chinese national, has been extradited from the Netherlands to the United States to face allegations connected to an international cryptocurrency investment scam. Prosecutors say the scheme used fake trading platforms to defraud U.S. victims and routed more than $36.9 million through a bank in the Bahamas before converting the funds to USDT.
- Prosecutors say the scheme targeted 174 U.S. citizens.
- Funds allegedly passed through Deltec Bank in the Bahamas to a wallet controlled by co-conspirators in Cambodia.
- Eight co-conspirators have pleaded guilty, according to the U.S. Attorney’s Office for the Central District of California.
- Zhao has been ordered detained. The allegations against him have not been proven in court.
How the alleged scam worked
Prosecutors say people involved in the scheme contacted potential victims through unsolicited social media messages, phone calls, texts and online dating platforms. They allegedly steered victims to websites designed to look like legitimate cryptocurrency trading platforms.
The fake platforms showed investments apparently growing in value, prosecutors say, while the victims’ money was secretly taken. The scheme allegedly identified and targeted 174 U.S. citizens. That figure does not show how many people invested or how much they lost.
The alleged route from bank accounts to USDT
Prosecutors say more than $36.9 million in victim funds moved from U.S. bank accounts controlled by co-conspirators to a single account at Deltec Bank in the Bahamas. Zhao and other alleged co-conspirators are accused of arranging to convert the funds into Tether (USDT) and send them to a digital wallet controlled by co-conspirators in Cambodia.
USDT is a stablecoin, a type of cryptocurrency designed to hold a relatively stable value. Prosecutors also allege that Cambodian co-conspirators distributed the tokens to leaders of scam centers in the region.
USDT transfers can be traced on a public blockchain. But tracing a transaction does not, by itself, prove who controlled a wallet. Investigators and, ultimately, the courts must establish that connection and each person’s role.
Extradition and court proceedings
Zhao was brought to Los Angeles after his extradition from the Netherlands. At his initial court appearance, he was ordered detained as proceedings continue. The available information does not specify the date of that appearance or the scheduled arraignment date.
Eight co-conspirators have pleaded guilty, according to the U.S. Attorney’s Office for the Central District of California. Their pleas do not establish Zhao’s guilt. Prosecutors must prove the allegations against him.
Assistant Attorney General A. Tysen Duva said authorities would pursue defendants overseas, adding: “We will pursue charged defendants anywhere in the world.”
Key questions and answers
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What is Zheng Zhao accused of?
Prosecutors allege he took part in an international investment scam that used fake crypto trading platforms to defraud U.S. victims. The allegations have not been proven in court.
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How much money was allegedly moved?
More than $36.9 million in victim funds, according to prosecutors.
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How did the money allegedly move?
Prosecutors say it passed through U.S. bank accounts to an account at Deltec Bank in the Bahamas, was converted to USDT and then sent to a wallet controlled by co-conspirators in Cambodia.
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How many people were targeted?
Prosecutors say the scheme identified and targeted 174 U.S. citizens. That number does not show how many invested or lost money.
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Does Zhao’s detention mean he is guilty?
No. He has been ordered detained while the case proceeds, but neither his detention nor the guilty pleas of co-conspirators establish his guilt.
