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A 44-year-old Chinese national, Zheng Zhao, was arraigned in the Central District of California on Oct. 23, 2026, after his extradition from the Netherlands on a money laundering conspiracy charge tied to an alleged cryptocurrency investment fraud that drew in 174 identified American victims, News.bitcoin reported. The Department of Justice said more than $36.9 million is alleged to have moved through a single Bahamas bank account in the scheme.
The charge against Zhao dates from August 2025 and carries a maximum prison sentence of 20 years. The Justice Department’s Office of International Affairs worked with Dutch authorities to secure his arrest and extradition, according to News.bitcoin.
Also read: UK Court Says Chinese Law Governs 61,000 Seized Bitcoin Claims
Key facts
- Zhao was arraigned on Oct. 23, 2026, after being extradited from the Netherlands; News.bitcoin reports the move was announced by the DOJ, while Cryptobriefing reports he landed in Los Angeles that day.
- Prosecutors allege more than $36.9 million moved from accounts controlled by co-conspirators to one account at Deltec Bank in the Bahamas, where funds were allegedly converted into tether (USDT) and sent to a wallet in Cambodia.
- Eight co-conspirators have pleaded guilty, including ShengSheng He (51 months) and Jingliang Su (46 months), who admitted conspiring to run an unlicensed money transmitting business.
- Cryptobriefing reports Zhao’s next hearing is scheduled for Nov. 30, 2026, and that some prior outcomes in the case involved restitution running into the millions of dollars.
- The case sits under the DOJ Criminal Division’s Cyber-Enabled Scam Initiative.
How the alleged scheme reached victims
According to the DOJ account carried by News.bitcoin, participants approached targets through unsolicited social media messages, telephone calls, texts and online dating services, built trust, then pitched investments on counterfeit trading platforms built to look like legitimate exchanges. Victims were shown paper gains while their deposits were routed through U.S. shell companies, international bank accounts and digital asset wallets.
Cryptobriefing describes the pattern as “pig butchering”, a label law enforcement uses for schemes that establish rapport before an investment pitch, and notes the fabricated returns displayed on the fake sites. It also points out that the laundering route leaned on conventional banking — U.S. shell companies and a Bahamian bank — with the stablecoin leg arriving at the end of the chain.
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Assistant Attorney General A. Tysen Duva of the Criminal Division framed the extradition as a warning to those who target Americans from abroad, saying it should be a lesson to anyone seeking to exploit vulnerable Americans from overseas.
Why it matters
The case illustrates how crypto fraud enforcement now spans jurisdictions: a suspect arrested in Europe, alleged victims in the U.S., alleged operations in Cambodia and dollar-pegged tokens used as the final transfer layer. For U.S. investors, the recurring warning signs are unsolicited approaches, unfamiliar trading venues and returns that look too good. Prosecutors have tagged stablecoins as a channel for laundering proceeds, though this case shows crypto was not the only conduit. It also follows a wider U.S. push — the DOJ’s Scam Center Strike Force has restrained roughly $938 million cumulatively, after about $52 million was restrained in a single day in a September action with the Treasury Department against the marketplace Xinbi Guarantee.
What to watch
Zhao’s next court hearing is scheduled for Nov. 30, 2026, according to Cryptobriefing, the next formal step in a case where eight co-defendants have already pleaded guilty. Further sentencing outcomes and any restitution orders will indicate how prosecutors are valuing the 174 identified victims’ losses.
Reported by news.bitcoin.com.
Sources: Bitcoin.com News, Cryptobriefing