Three individuals have been apprehended for their involvement in an extensive conspiracy that resulted in a $10 million loss for banks across the New York City metropolitan area, as announced by Damian Williams, the United States Attorney for the Southern District of New York.
“For years, Zhong Shi Gao, Naifeng Xu, and Fei Jiang allegedly engaged in a complex scheme to pilfer over $10 million from nearly a dozen U.S. banks and financial institutions. They then converted the stolen funds into cryptocurrency and transferred them to foreign cryptocurrency exchanges,” said Williams.
The Elaborate Scheme
Gao, Jiang, and Xu collaborated and recruited several Chinese and Taiwanese foreign nationals residing in the United States to open bank accounts throughout the New York City Metropolitan area. These accounts were subsequently taken control of by the trio, who orchestrated a series of transfers and deposits. Eventually, they filed fraudulent reports claiming that the transactions were unauthorized.
The banks, unaware of the deception, temporarily credited the accounts with the transferred funds, thereby effectively doubling the initial deposits. Meanwhile, the defendants expeditiously withdrew the credited funds in the form of cash or cryptocurrency, which they stored on foreign exchanges. By the time the banks realized the authenticity of the original reports, it was too late.
Facing the Consequences
Gao, Jiang, and Xu are now confronted with four charges each, including bank fraud conspiracy, conspiracy to commit wire fraud, money laundering conspiracy, and aggravated identity theft. The case has been assigned to U.S. District Judge Colleen McMahon. Although the defendants could potentially receive a maximum sentence of 82 years in prison, the precise duration of their incarceration will be determined by the judge’s discretion.
In response to these arrests, FBI Assistant Director in Charge James Smith remarked, “Schemes like this harm institutions and impede the reporting of suspicious transfers. The FBI will hold you accountable within the criminal justice system.”
These arrests are part of a larger crackdown on fraud within the cryptocurrency sector. Damian Williams emphasized, “These charges should serve as a warning to fraudsters and cybercriminals who believe they can exploit cryptocurrency to conceal their identities. Alongside our partner agencies, we will locate and ensure that you are held responsible for your crimes.”
Williams’ statements echo those he made during a recent press conference, where he urged individuals involved in crypto fraud to cease their activities. This call came in the wake of the trial and conviction of Sam Bankman-Fried, the disgraced founder of FTX. Williams emphatically declared, “And if they don’t, I promise we’ll have enough handcuffs for all of them.”
