The Central District Court of California sentenced Axis Digital co-founder Shengsheng He to 51 months in federal prison for participating in the laundering of $36.9 million obtained from cryptocurrency fraud.
The court also ordered the 39-year-old man to pay $26.8 million in restitution to the victims. According to the U.S. Department of Justice, He was a co-owner of Axis Digital Limited, a company registered in the Bahamas, which was used to obtain and transfer investor funds. The organizers of the scheme operated from Cambodia. He was part of an international criminal network — scammers contacted U.S. residents through social media, via phone calls, text messages, and even through online dating services to gain people's trust.
Fraudsters offered potential investors to invest in digital assets and deposit money into a platform controlled by them. The criminals convinced the victims that their investments were multiplying, while in reality, they were embezzling client funds. The organizers of the scheme transferred over $36.9 million from accounts in American banks, raised from investors, to an account at Deltec Bank in the Bahamas, opened for the company Axis Digital. Then the investors' funds were converted into Tether (USDT) stablecoins and transferred to a cryptocurrency wallet controlled by the criminals in Cambodia. From there, the funds were distributed among fraudulent centers throughout Cambodia.
"The defendant was part of a criminal group that deceived American investors by promising them high returns on investments in digital assets. Although in reality, the defendants stole nearly $37 million, utilizing Cambodian fraudulent centers. Unfortunately, the number of such centers offering investments in digital assets has sharply increased," said Acting Assistant Attorney General Matthew Galeotti.
Several months ago, He pleaded guilty to conspiracy to operate an unlicensed money transfer business. Eight of his accomplices have already pleaded guilty to fraud and money laundering through cryptocurrencies. Among them is Daren Li, who holds dual citizenship in China and Saint Kitts and Nevis. Since April 2024, he has been in custody in the USA.
