3 bank fraud suspects arrested in USA and identified via Crypto

Three people were arrested in the USA for fraud and money laundering on November 16. Zhong Shi Gao, Naifeng Xu and Fei Jiang are accused of stealing over $10 million from various US banks before converting it into cryptocurrency to conceal themselves. The defendants face up to 82 years in prison.

Three suspected fraudsters arrested in the USA

U.S. authorities continue the fight against financial fraud in the country. On Thursday, November 16, the U.S. Attorney’s Office for the Southern District of New York announced the arrest of three people for bank fraud, money laundering and identity theft. Each faces up to 82 years in prison.

Zhong Shi Gao 31 years old, Naifeng Xu 37 years old and Fei Jiang 41, are suspected of fraudulently withdrawing over $10 million from several banks in the USA. The three suspects are also accused of converting the stolen funds into cryptocurrency. The events are said to have taken place between 2018 and 2022, the US Attorney reports. He also calls on the fraudsters to stop, as they will eventually be caught by the law.

These charges should serve as a warning to fraudsters and cybercriminals who think they can turn to cryptocurrency to hide their identities. Together with our partner agencies, we will find you and hold you accountable for your crimes.

U.S. Attorney Damian Williams

Investigation into bank fraud, money laundering and identity theft

How did the three suspects manage to steal so much money in 4 years without being identified? Very easily, in three steps, which we explain below. First of all, the three suspects opened several bank accounts in the USA through people mainly from China and Taiwan. Control of these bank accounts was entrusted to the three suspects.

Secondly, Zhong Shi Gao, Naifeng Xu and Fei Jiang deposited and transferred funds to these accounts. Almost immediately after the deposit or transfer, they informed the banks that the transfers were not authorized. This alert prompted both the bank issuing and the bank receiving the wire transfer to temporarily credit the accounts with the amount of funds transferred. This made it possible to double the initial amount.

Finally, the three suspects withdrew the funds as quickly as possible before the banks became aware of them. The money withdrawn was then converted into cryptocurrency and transferred to exchanges to cover their tracks. Using this technique, the three suspects managed to steal over $10 million between 2018 and 2022. A long maneuver, but one that was finally detected by the American justice system.

Unlike crypto, which is accused of being a tool for fraud, banks are often presented as safe financial institutions. This case is a reminder of the extent to which banks are a breeding ground for massive and easy fraud. On the other hand, on-chain transactions, i.e. those that take place on a blockchain, are traceable with extremely high reliability, despite prejudices on this point. The Irish authorities know all about it and certainly won’t deny it.