A California man received a 51-month prison sentence for laundering $36.9 million from a Cambodian crypto investment scam.

Executive Summary

A California man was sentenced to 51 months in prison for laundering $36.9 million from a Cambodian crypto investment scam. The funds, originating from U.S. victims defrauded through pig butchering schemes, were funneled through Huione International Payments and its Telegram-based platform, Huione Guarantee. The defendant, a former co-owner of Axis Digital in the Bahamas, facilitated the conversion of stolen funds into Tether (USDT) via Deltec Bank before transferring them to scam operators in Cambodia.

The Event in Detail

Shengsheng He, 39, of La Puente, California, was sentenced on September 8, 2025, after pleading guilty to conspiracy to operate an unlicensed money transmitting business. He admitted to his role in laundering funds stolen from U.S. investors through an international crypto investment scam. The Justice Department (DOJ) described the scheme as a coordinated operation involving multiple actors working from Cambodian scam centers. Victims were lured through unsolicited messages, social media, and dating apps with promises of high returns on fake digital asset investments. Once victims invested, their funds were quickly siphoned into offshore accounts.

Specifically, over $36.9 million was transferred to an Axis Digital account at Deltec Bank in the Bahamas, then converted to USDT and sent to wallets managed by individuals in Sihanoukville, Cambodia. The court ordered He to pay $26.87 million in restitution. Eight co-conspirators have pleaded guilty, including Daren Li, a national of China and St. Kitts and Nevis, who was arrested in April 2024 on separate money laundering charges, and Jose Somarriba and Jingliang Su who were involved in managing fund transfers and digital asset conversions.

Market Implications

This case highlights the persistent risks of scams and money laundering within the cryptocurrency market, potentially impacting investor confidence and increasing regulatory scrutiny. The use of Tether (USDT) as a conduit for laundering illicit funds raises concerns about the stablecoin's role in facilitating criminal activities. The involvement of Huione International Payments, which allegedly processed up to $98 billion in illicit crypto transactions before being shut down in May, underscores the scale of the problem. > Blockchain security firm Elliptic co-founder Tom Robinson told CoinDesk that “some of the victim funds in this case were laundered through Huione International Payments, which operated through Huione Guarantee.”

Expert Commentary

Acting Assistant Attorney General Matthew G. Galeotti of the Justice Department's Criminal Division stated, > “The defendant was part of a group of co-conspirators that preyed on American investors by promising them high returns on supposed digital asset investments when, in fact, they stole nearly $37 million from U.S. victims using Cambodian scam centers.”

Broader Context

Cryptocurrency scams cost investors an estimated $9.9 – $10.7 billion globally in 2024. Pig butchering schemes, which blend romance and investment fraud, are a significant driver of these losses. Scammers build trust with victims over extended periods before persuading them to invest in fake crypto assets. Preventing fraud before payments are sent is critical. Emerging strategies to combat crypto scams include enhanced pre-transaction AML/KYC checks, real-time transaction monitoring using blockchain analytics tools, and collaborative intelligence sharing among financial institutions. Regulatory advancements such as the EU's Markets in Crypto-Assets Regulation (MiCAR) and proposed stablecoin legislation in the U.S. aim to enhance market integrity and reduce the risk of fraud.