Suspect in $37M scam laundering via USDT extradited to US

Key points

• Zheng Zhao, 44, extradited from the Netherlands, appeared in Los Angeles court Oct. 23
• Over $36.9M from 174 identified US victims allegedly went through a Bahamas bank into USDT
• Prosecutors have not accused Tether or Deltec of knowing involvement, CryptoSlate said
• Arraignment set for Nov. 30; co-defendant Jingliang Su got 46 months

A Chinese national accused of helping launder more than $36.9 million stolen from Americans in crypto investment scams appeared in a Los Angeles federal court on Oct. 23 after being extradited from the Netherlands, according to a CryptoSlate report. A judge ordered the suspect, Zheng Zhao, 44, detained while the case proceeds.

Zhao was charged in August 2025 with conspiracy to commit money laundering, an offense that carries a maximum of 20 years in prison, CryptoSlate reported. He is presumed innocent. His arraignment is scheduled for Nov. 30 in Los Angeles.

How the alleged laundering worked

Prosecutors allege that fraudsters contacted victims through social media, dating platforms, phone calls and text messages. Victims were then steered to fake crypto investment sites that imitated real trading platforms and displayed fabricated gains. CryptoSlate reported that 174 US victims have been identified.

According to the report, more than $36.9 million was traced from US bank accounts to a single account at Deltec Bank in the Bahamas. The money was allegedly converted into Tether’s USDT stablecoin and sent to a wallet controlled by people in Cambodia, who then distributed it to leaders of scam centers.

CryptoSlate noted that prosecutors have not accused Tether or Deltec Bank of knowingly participating in the fraud. The Deltec account was held in the name of Axis Digital Limited, the report said.

Other defendants and sentences

The case has already produced several prosecutions. CryptoSlate named Jose Somarriba and ShengSheng He as people who allegedly set up Axis Digital and opened the account. It said Joseph Wong allegedly managed money launderers in Los Angeles who created shell companies and bank accounts, and that Yicheng Zhang allegedly operated two accounts used in the scheme.

Jingliang Su, who allegedly joined Axis Digital as a director and helped convert victim funds into crypto, pleaded guilty to conspiracy to operate an unlicensed money-transmitting business. He was sentenced to 46 months in prison. A court ordered him in January to pay about $26.9 million in restitution, according to CryptoSlate. Separate coverage of the sentencing, including by The Block, gives the same sentence and a restitution figure of $26,867,242.

CryptoSlate reported that eight other participants have pleaded guilty, and that one defendant received a 51-month sentence. Some outlets have attributed a 51-month term to He, though accounts of that sentence differ.

What remains unclear

Authorities have not disclosed how much of the stolen money has been recovered, and no new repayment figure accompanied the latest development. The restitution order against Su is far smaller than the total traced losses.

The case is part of a broader set of US prosecutions over so-called pig-butchering schemes, in which scammers build trust with victims before pushing them into fake investments. The Justice Department has described earlier guilty pleas and sentences in this case in releases from its Office of Public Affairs.

The next scheduled step is Zhao’s Nov. 30 arraignment in Los Angeles, where he is expected to be formally asked to enter a plea.