US extradites Zheng Zhao to face money laundering charges in crypto scam

A Chinese national accused of helping launder proceeds of a Cambodia-based cryptocurrency investment scam was arraigned in the Central District of California after the Netherlands extradited him. The case traces victim money from U.S. bank accounts through a Bahamas bank into Tether (USDT) and on to scam-center leaders, a route that matters to banks and stablecoin intermediaries.

• Zheng Zhao, 44, was arraigned in the Central District of California after extradition from the Netherlands.
• He is charged with conspiracy to commit money laundering and faces a maximum of 20 years if convicted.
• Watch for a plea or trial schedule; eight co-conspirators have already pleaded guilty.

• $36.9M in victim funds sent to one Deltec Bank account, per DOJ
• 174 U.S. victims identified, the release says, “ultimately”
• 20 years maximum penalty, against 51 months for co-defendant ShengSheng He
• 8 co-conspirators have pleaded guilty, two of them sentenced

The Justice Department said in a release that Zhao was arraigned today over his alleged role in an international cryptocurrency investment conspiracy run from scam centers in Cambodia. The release says the government “ultimately” identified 174 U.S. victims. Zhao was charged in August 2025 with conspiracy to commit money laundering.

The matter is charged and contested at this stage. The release states: “A criminal complaint is merely an allegation.”

The alleged route ran through a Bahamas bank and into USDT

According to court documents cited in the release, the network contacted U.S. victims through unsolicited social media interactions, calls, texts and online dating services. Co-conspirators then promoted fraudulent digital asset investments and built fake websites that resembled real trading platforms. Victims were told their investments were appreciating when the money had been stolen.

Victims allegedly sent funds to accounts controlled by co-conspirators, who laundered the money through U.S. shell companies, international bank accounts and digital asset wallets. More than $36.9 million moved from U.S. bank accounts controlled by the co-conspirators to a single account at Deltec Bank in the Bahamas. The release describes the next step as follows:

Zhao and other co-conspirators arranged for Deltec Bank to convert victim funds to the stablecoin Tether (USDT) and to transfer the converted funds to a digital asset wallet controlled in Cambodia.

Justice Department release, Criminal Division

From the Cambodian wallet, co-conspirators allegedly sent the USDT to the leaders of scam centers across the region. The release does not allege wrongdoing by Deltec Bank, and it does not say the bank knew the source of the funds.

Co-defendants received under five years, while Zhao faces up to 20

Eight co-conspirators have pleaded guilty, including ShengSheng He and Jingliang Su. Each pleaded guilty to conspiracy to operate an unlicensed money transmitting business. He was sentenced to 51 months, or 4.25 years, and Su to 46 months, five months less.

Zhao faces a different count. A conviction for conspiracy to commit money laundering carries a maximum of 20 years, which is 240 months, against the 51 months imposed on He, the longer of the two sentences the release names. The release does not give the statutory maximum for the unlicensed-transmitter count, so the gap between the charges cannot be fully compared.

The Criminal Division’s Cyber-Enabled Scam Initiative is bringing the case. The release says CCIPS has secured over 180 convictions and court orders returning over $350 million in victim funds since 2020. That is more than nine times the $36.9 million in this case, though the release does not say how much of that total involves scam-center cases.

What changes for banks and stablecoin intermediaries, and what the release leaves open

For compliance teams, the alleged pattern is concrete: U.S. shell company accounts feeding a single offshore bank account, then a fiat-to-USDT conversion and a transfer to a wallet in Cambodia. Prosecutors are describing the conversion step as the point where scam proceeds changed form. Assistant Attorney General A. Tysen Duva said the department will pursue charged defendants “anywhere in the world,” and the Dutch extradition shows that reach in practice.

The release leaves several questions unanswered. It does not say what Zhao’s specific role was, whether he has entered a plea, or when the extradition occurred. It does not say whether any of the $36.9 million was frozen or recovered. It also does not say whether the charge rests on a complaint or an indictment, though it refers to a criminal complaint.

The 174 victims and the $36.9 million may not cover the same population. If they do, the average is about $212,000 per identified victim, but the release does not make that link.

The BlockWest read. We expect the pressure to land on the conversion point. Prosecutors here charged the individual who allegedly arranged the fiat-to-USDT step, not the stablecoin or the wallet. Any bank or desk that converts large fiat inflows into USDT for offshore wallets is the chokepoint the alleged scheme depended on. Its onboarding and transaction-monitoring records will be the evidence that matters in cases like this, and compliance teams should assume those records get requested.

The release gives no date for Zhao’s next court appearance. The next event is a plea or trial-setting in the Central District of California, and whether he follows the eight co-conspirators who pleaded guilty is the open question.

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