A 44-year-old Chinese national has been brought before a U.S. court after being extradited from the Netherlands in a case tied to an alleged cryptocurrency investment scam that prosecutors say moved more than $36.9 million and harmed 174 Americans.
Zheng Zhao was arraigned in the Central District of California on Oct. 23 on a money laundering conspiracy charge. The U.S. Department of Justice says the alleged scheme used offshore accounts, shell companies and digital asset wallets to move victim funds before converting them into tether, or USDT, and sending the tokens to a wallet in Cambodia.
Charge follows extradition from the Netherlands
The charge against Zhao dates to August 2025 and carries a maximum sentence of 20 years in prison if he is convicted. Prosecutors have presented the case as part of the Justice Department Criminal Division’s Cyber-Enabled Scam Initiative.
The broader case has already produced guilty pleas from eight co-conspirators, according to the DOJ. Among them are ShengSheng He and Jingliang Su, who admitted conspiring to operate an unlicensed money transmitting business.
How investigators say the alleged fraud worked
According to prosecutors, people involved in the operation contacted prospective victims through unsolicited social media messages, telephone calls, text messages and online dating services. They allegedly promoted bogus digital asset investments using fake trading platforms made to look like legitimate cryptocurrency exchanges.
Victims were allegedly led to believe their holdings were gaining value even as the money was being routed through a cross-border financial network. The DOJ says that network involved U.S. shell companies, foreign bank accounts and cryptocurrency wallets used to move and disguise the proceeds.
More than $36.9 million allegedly flowed through Bahamas account
Investigators say more than $36.9 million was transferred from accounts controlled by co-conspirators into a single account at Deltec Bank in the Bahamas. Zhao and others are accused of arranging for those funds to be converted into USDT.
The Justice Department alleges the USDT was then sent to a digital asset wallet in Cambodia, where co-conspirators transferred the tokens onward to leaders of regional scam centers. Authorities say publicly visible blockchain transactions can help trace crypto movements, but following funds becomes more difficult once assets pass into foreign jurisdictions with weaker anti-money laundering controls.
Wider enforcement effort against overseas scam networks
The Zhao case sits alongside a broader set of actions aimed at transnational fraud and money laundering networks operating in Asia. In a separate matter, Cambodian authorities extradited Prince Group head Chen Zhi to China in January in an investigation involving accusations of cryptocurrency fraud and forced labor.
Japanese authorities also arrested alleged Prince Group associate Hu Shi in Osaka in June on suspicion of falsifying public records, and police linked him to the group. Separately, a September operation by the DOJ’s Scam Center Strike Force and the U.S. Treasury Department targeted Xinbi Guarantee, a Chinese-language marketplace that authorities said connected scam operators with vendors offering fraudulent websites and money laundering services. That action restrained about $52 million in cryptocurrency in a single day and brought the Strike Force’s cumulative restrained total to about $938 million.
Next step in the case
For now, the confirmed development is Zhao’s appearance in federal court in California after extradition. The central allegation he faces is conspiracy to launder proceeds from an investment scam that prosecutors say victimized 174 Americans, and the government still must prove the charge in court.
If convicted, Zhao could face up to 20 years in prison. The case also remains one example of how U.S. authorities are pursuing alleged scam networks that combine social engineering, offshore banking and stablecoin transfers to move funds across borders.
Source: news.bitcoin.com