California man sentenced to over four years for laundering $37 million in stolen crypto

A California man has been sentenced to more than four years in federal prison for his role in laundering $36.9 million stolen from American investors through an international crypto investment scam operated out of Cambodia, according to the U.S. Department of Justice.

In a statement released Monday, the DOJ said that Shengsheng He, 39, of La Puente, California, received a 51-month prison sentence and was ordered to pay $26.8 million in restitution to victims.

He pleaded guilty in April to conspiracy to operate an unlicensed money transmitting business in the Central District of California. According to the DOJ, he was a co-owner of Bahamas-based Axis Digital Limited, which helped funnel funds from U.S. victims into overseas accounts. 

Prosecutors said that scammers based in Cambodia contacted victims through unsolicited text messages, social media, phone calls, and online dating platforms, promising lucrative returns from supposed crypto asset investments. Instead, victims' money was diverted through shell companies, U.S. bank accounts, and crypto wallets controlled by the fraud network.

Specifically, at least $36.9 million in victim funds were funneled from U.S. bank accounts to an account at Deltec Bank in the Bahamas under Axis Digital's name. The funds were converted into USDT and sent to wallets managed by individuals in Cambodia, who then distributed the funds to scam center leaders, including operations in Sihanoukville, according to the statement.

"Foreign scam centers, purporting to offer investments in digital assets have, unfortunately, proliferated," said Acting Assistant Attorney General Matthew R. Galeotti of the DOJ's Criminal Division. "The Criminal Division is committed to bringing to justice those that steal from American investors, wherever the fraudsters may be located."

Eight co-conspirators have also pleaded guilty in connection with the scheme, including Chinese national Daren Li and Lu Zhang, who managed a network of U.S.-based money launderers.