• Three men filed fraudulent reports with banks concerning unauthorized wire transactions, thereby stealing $10 million.

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United States prosecutors arrested three people for allegedly stealing $10 million from financial institutions and laundering the stolen funds using cryptocurrency exchanges.

The individuals could each get up to over 80 years in prison if found guilty of the allegations.

Defrauding Banks and Channeling Proceeds to Crypto Exchanges

A press release by the U.S. Attorney’s Office for the Southern District of New York announced the arrest of Zhong Shi Gao, Naifeng Xu, and Feo Jiang by the Federal Bureau of Investigations (FBI), for their alleged involvement in an elaborate fraud scheme targeting banks and financial institutions in the United States.

Gao, Xu, and Jiang reportedly hired Chinese and Taiwanese foreign nationals temporarily living in the United States to open bank accounts in the New York City metropolitan area and other places.

Control of these accounts was handed over to the three men, who would cause funds to be deposited and transferred between them before proceeding to report unauthorized wire transfers, thereby prompting the banks to credit their accounts.

Following the receipt of the credited money, Gao, Xu, and Jiang either decided to make withdrawals or convert the funds to crypto and transfer the funds to cryptocurrency exchanges overseas before the banks were aware of the fake unauthorized reports.

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The fraudulent act spanned between 2018 and 2022, with the scammers raking in more than $10 million from the illicit activity. As stated in the press release, the theft affected “nearly a dozen banks and financial institutions.”

Maximum Jail Term of 82 Years if Guilty

Gao, Xu, and Jiang are each slammed with one count of bank fraud conspiracy, one count of “conspiracy to commit wire fraud affecting a financial institution,” one count of conspiracy to commit money laundering, and one count of aggravated identity theft.

While the first two counts each carry a maximum prison sentence of 30 years, the third and fourth counts could come with a maximum jail term of 20 years and two years, respectively.

Commenting on the development, U.S. Attorney Damian Williams said in a statement:

“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.”