Two people have been arrested in the US on charges of laundering at least $73m through shell companies tied to cryptocurrency investment scams.

Daren Li, 41, a dual citizen of China and St Kitts and Nevis, and a resident of China, Cambodia, and the United Arab Emirates, was arrested on April 12; Yicheng Zhang, 38, a Chinese national and resident of Temple City, California, was arrested on Thursday.

According to court documents, Li, Zhang and other conspirators allegedly managed an international syndicate that laundered proceeds of cryptocurrency investment scams, also known as “pig butchering.”

More than $73m was laundered through US financial institutions to bank accounts in The Bahamas and converted to the virtual asset USDT, also known as Tether. One cryptocurrency wallet involved in the scheme received more than $341m in virtual assets.

“Cryptocurrency investment scams exploit the borderless nature of virtual currency and online communications to defraud victims,” said US Deputy Attorney General Lisa Monaco.

“While fraud in the crypto markets takes on many forms and hides in many far-off places, its perpetrators aren’t beyond the law’s reach. Today, we announce the arrests of two foreign nationals charged for leading a scheme to launder funds to the tune of at least $73 million tied to an international crypto investment scam. These arrests – made possible through the assistance of our international and US partners – reflect the Justice Department’s ongoing commitment to disrupting the entire cybercrime ecosystem and stopping fraud across all financial markets.”

Li and Zhang are both charged with conspiracy to commit money laundering and six substantive counts of international money laundering. If convicted, the defendants face a maximum penalty of 20 years in prison on each count.

Settlement for Genesis bankruptcy victims

Crypto firm Genesis, which filed for bankruptcy in January 2023, has agreed to a $2 billion settlement.

This will go towards a “Victims’ Fund” to help reimburse those defrauded, among them at least 29,000 New Yorkers who contributed more than $1.1 billion to Genesis through the Gemini Earn investment program.

This is the largest settlement in New York state involving a crypto company to date.

“We see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve,” New York Attorney General Letitia James said.

Attorney James has previously proposed nationwide crypto industry regulation in the form of the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act.

Ether ETF speculation boosts market

Crypto climbed again this week on further speculation of an ether ETF launch. The industry has long suspected an ether ETF approval date in the first half of this year.

Any movements now hinge on the SEC’s decision on May 23 whether to approve the VanEck spot ETF. ARK Investment Management is hoping for an approval the following day.

“In the lead-up to the spot ether ETF approval decision deadlines this week, we should expect heightened volatility and cautious market behavior as traders navigate uncertainties,” Cobo COO Lily King told The Block.

Industry insiders, including VanEck CEO Jan van Eck, told Yahoo! last week they aren’t optimistic and that the filing will “probably be rejected.”

But the roughly 15% gains made by ether this week signal investor optimism, backed by Bloomberg analyst approval odds of 75%.

“The SEC hasn’t even made its decision on the ETH spot ETFs yet. It could still go either way. In the case of a rejection, we’ll certainly see more selling pressure. But even if it is approved, we’re likely to still see a pullback in the short term, like we did with spot BTC ETFs,” said Lucas Kiely, Chief investment Officer, Yield App.