FBI uncovers multimillion-dollar crypto fraud scheme

Three individuals have been arrested for defrauding New York-area banks of over $10 million by exploiting security vulnerabilities and converting the stolen funds into crypto.

In a major fraud case, Zhong Shi Gao, Naifeng Xu and Fei Jiang are charged with tricking New York City-based banks into giving them more than $10 million from 2018 to 2022. U.S. Attorney Damian Williams revealed this scam, highlighting serious issues in bank security and the misuse of cryptocurrencies.

The three men fooled banks by pretending to be victims of fake money transfers. By doing this, the banks gave the perpetrators money to cover for fake transfers, doubling the conspirators’ money.

The criminals elected to turn the stolen funds into cryptocurrency thereafter, believing digital currencies could better hide their actions. Williams went on to point out that law enforcement can still track and catch criminals such as these.

The men face charges including bank fraud, wire fraud, money laundering and identity theft, and could be sentenced to nearly 100 years in prison. This case should serve as a cautionary tale to both banks and would-be criminals looking to profit off of similar actions.

Individuals from China and Taiwan assisted the criminals setting up U.S. bank accounts to carry out fraud. Financial crimes are becoming more prevalent on an international level, countries may need to collaborate in order to prevent these types of crimes from being carried out.