Crypto Scam Lands California Man in Prison

A California man, Shengsheng He, has been sentenced to 51 months in federal prison and ordered to pay $26.9 million in restitution for his role in laundering nearly $37 million stolen from U.S. investors through a cryptocurrency scam. He pleaded guilty to conspiracy to operate an unlicensed money transmitting business.

The "Pig Butchering" Scheme

The Justice Department revealed that He co-owned Axis Digital Limited, a Bahamas-based company used to receive and transfer victim funds. The scam, often referred to as "pig butchering," involved:

• Building trust with victims through unsolicited messages, calls, and dating apps.
• Promoting fraudulent digital asset investments.
• Falsely inflating the perceived value of investments.

Victims' funds were funneled into an Axis Digital account, converted into Tether (USDT), and then moved to wallets controlled by the scammers. The funds were routed through shell companies and overseas accounts to hide their origin.

Prosecutors stated that the scam originated from Cambodian “pig butchering” centers, where criminals use social engineering to defraud victims. These scams reportedly netted $9 billion in 2024 alone.

DOJ's Ongoing Crackdown

He's case is part of a broader effort by the Department of Justice to combat crypto-related fraud. Recent actions include:

• Seizing digital assets linked to terrorist financing.
• Returning millions to victims of investment fraud.
• Targeting offshore exchanges used for money laundering.

Other individuals involved in the Axis Digital case have also pleaded guilty, including Jose Somarriba and Jingliang Su.

Key Takeaways:

• "Pig butchering" scams are a significant threat in the crypto space.
• Laundering illicit crypto funds carries significant penalties.
• The DOJ is actively pursuing crypto-related fraud cases.