Court hands 4-year sentence to mastermind of $37M crypto money laundering scheme

The United States Justice Department (DOJ) sentenced the California man to more than four years in prison for participating in a global crypto scam where victims counted over $30 million in losses.

39-year-old Shengsheng He of La Puente was handed a 51-month prison sentence in the Central District of California on Monday. He previously pleaded guilty on April 10 to conspiracy to operate an unlicensed money transmitting business that laundered $36.9 million to crypto.

Along with prison time, the court ordered He to pay more than $26.8 million in restitution to victims of the scheme.  

DOJ finds He guilty for crypto money scam business

According to a statement from the US DOJ, He was among the masterminds in a network that targeted US investors through fraudulent digital asset investments.

“The defendant was part of a group of co-conspirators that preyed on American investors by promising them high returns on supposed digital asset investments when, in fact, they stole nearly $37 million from US victims using Cambodian scam centers,” Acting Assistant Attorney General Matthew R. Galeotti of the DOJ’s Criminal Division told reporters.

Galeotti also mentioned that scam centers operating overseas, especially those presenting themselves as investment opportunities, have grown significantly in recent years. 

“The Criminal Division is committed to bringing to justice those that steal from American investors, wherever the fraudsters may be located,” he remarked.

Per the court documents shared to the media on Monday, the conspiracy involved several co-conspirators based in the US and abroad, using centers in Cambodia. The group contacted American victims through social media messages, phone calls, text messages, and even online dating services. 

The scammers first gained the crypto holders’ trust, then persuaded them to invest in “profitable crypto ventures.” Victims were told their investments were growing in value, but the funds had already been siphoned away. 

More than $36.9 million was funneled from US bank accounts into a single account at Deltec Bank in the Bahamas, registered under Axis Digital Limited. He co-founded Axis Digital with another defendant, Jose Somarriba, while Chinese national Jingliang Su later joined as a director. 

Victims’ funds were deposited in Daltec, then converted into the Tether stablecoin (USDT). Prosecutors claimed He and others had instructed the bank to transfer the digital assets to wallets controlled by accomplices in Cambodia. From there, scam center operators in cities like Sihanoukville received the crypto, which was then passed along to “executives” of the scheme.

According to the DOJ statement, eight co-conspirators named in the case had already admitted guilt in connection with the operation. The money launderers’ list included Daren Li, a citizen of China and St. Kitts and Nevis, who has been in US custody since April 2024, and Lu Zhang, another illegal US immigrant, who told prosecutors he managed domestic money launderers. 

US Attorney: Beware of public of online scams

Acting US Attorney Bill Essayli of the Central District of California said He’s sentencing is a warning to the demographic trying to use digital assets to launder stolen money.

“This defendant will spend years in federal prison for participating in a conspiracy in which victims lost tens of millions of dollars, starting with the simple step of responding to unsolicited messages on their phones,” Essayli said.

He told Americans to counter-check strangers promoting investment opportunities online. “Your retirement fund or children’s college money may depend on it,” he added.

Assistant US Attorneys Maxwell Coll and Alexander Gorin of the Terrorism and Export Crimes Section, Nisha Chandran of the Major Frauds Section, and Trial Attorney Stefanie Schwartz of the DOJ’s Computer Crime and Intellectual Property Section (CCIPS) led the prosecution, alongside Tamara Livshiz of the Criminal Division’s Fraud Section.

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