CryptoSlate
Chinese national Zheng Zhao, 44, appeared in a Los Angeles federal court on Oct. 23 after his extradition from the Netherlands over charges he helped launder $36.9 million stolen from crypto scam victims. He was charged in August 2025 with conspiracy to commit money laundering and faces up to 20 years in federal prison. A judge has ordered him detained pending further proceedings.
Prosecutors allege Zhao helped a network operating from scam centers in Cambodia defraud 174 identified American victims through fake crypto trading platforms promoted on social media and dating apps, complete with fabricated gains to bait further deposits. Investigators traced more than $36.9 million from US bank accounts to a single account at Deltec Bank in the Bahamas, where the funds were converted into Tether's USDT and sent to a wallet controlled by individuals in Cambodia. Prosecutors have not accused Tether or Deltec of knowingly participating in the fraud.
Why it matters
The case is a rare full map of a pig-butchering laundering chain, from US victim bank accounts through shell companies and an offshore bank into stablecoins and back out to organized scam hubs. Eight co-defendants have already pleaded guilty, with sentences including 51 and 46 months and a $26.9 million restitution order against one defendant. The DOJ's Cyber-Enabled Scam Initiative is using the network as a template for pursuing the financial infrastructure behind overseas scam centers.
Market impact
The prosecution shows stablecoins sitting squarely inside the compliance perimeter: traditional banking rails were used to enter crypto, and investigators followed the full path. For victims, recovery remains uncertain, as authorities have not disclosed how much money has actually been recovered or distributed. Zhao is due to be arraigned on Nov. 30 in Los Angeles and remains presumed innocent.
Frequently asked questions
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Who is Zheng Zhao and what is he accused of?
Zheng Zhao is a 44-year-old Chinese national extradited from the Netherlands to the US, charged with conspiracy to commit money laundering over his alleged role in moving $36.9 million stolen from crypto scam victims. He faces up to 20 years in federal prison.
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How did stolen funds reach Tether's USDT?
Investigators traced more than $36.9 million from US bank accounts controlled by conspirators to a single account at Deltec Bank in the Bahamas, where it was converted into USDT and transferred to a wallet controlled by individuals in Cambodia.
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Were Tether or Deltec Bank charged in the case?
No. Prosecutors have not accused Tether or Deltec Bank of knowingly participating in the fraud. The charges target the individuals and shell companies, including Axis Digital Limited, which operated the Deltec account.
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How many victims were affected and how much was lost?
Prosecutors identified 174 American victims who lost a combined $36.9 million to the scheme, which lured deposits through fake crypto trading platforms promoted on social media and dating platforms.
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Have other participants in the laundering network been convicted?
Yes, eight co-defendants have pleaded guilty. ShengSheng He received 51 months and Jingliang Su 46 months, and a federal court ordered Su to pay approximately $26.9 million in restitution, though recovered amounts have not been disclosed.
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