In a significant legal development highlighting the intensifying global crackdown on digital asset fraud, Chinese national Jingliang Xu (also identified as Jingliang Su) has been sentenced to 46 months in federal prison for his central role in a sophisticated $37 million cryptocurrency laundering scheme that specifically targeted American investors. U.S. District Judge R. Gary Klausner handed down the sentence and also ordered Xu to pay over $26.8 million in restitution to the victims.
The elaborate scam operated by convincing U.S. victims to transfer funds to accounts controlled by the criminal network. Perpetrators contacted potential victims through texts, phone calls, and even online dating platforms, promoting fake cryptocurrency investments. They used professionally designed fake websites that mimicked legitimate crypto trading platforms to lend credibility to the operation. Victims were falsely led to believe their investments were growing, while in reality, their money was being stolen.
The money laundering pipeline was complex and international in scope. After collecting funds, the network funneled the illicit proceeds—totaling more than $36.9 million—through U.S. shell companies and digital asset wallets. The money was then transferred to a bank account at Deltec Bank in the Bahamas. From there, the funds were converted into the stablecoin Tether (USDT). "From there, co-conspirators in Cambodia transferred the USDT to the leaders of scam centers throughout the region," prosecutors stated.
The prosecution identified 174 victims in the United States. First Assistant United States Attorney Bill Essayli commented on the case, stating, "New investment opportunities may sound intriguing, but they have a dark side: attracting criminals who, in this case, stole then laundered tens of millions of dollars from their victims." The case required substantial international cooperation between U.S. authorities and their counterparts in Asia and Europe to trace the cross-border movement of funds.
Xu pleaded guilty in June to one count of conspiracy to operate an illegal money transmitting business. He is one of eight individuals who have pleaded guilty in connection with the scheme. Another co-conspirator, Shengsheng He, 39, of La Puente, California, was sentenced to over four years in prison.
This sentencing occurs amid a period of heightened regulatory scrutiny and evolving global frameworks designed to combat the misuse of cryptocurrencies for illicit activities. The case underscores the vulnerabilities investors face from sophisticated international fraud and the ongoing challenges of tracking crypto transactions across jurisdictions.
