$265 Million Crypto Scam: New Zealand Man Arrested in FBI-Led Probe

• $265 million stolen from seven victims
• FBI-led international investigation
• Lavish spending on luxury goods and properties

In a significant development, a Wellington-based man was arrested in Auckland as part of an FBI-led international investigation into a staggering $265 million cryptocurrency scam. This sophisticated operation, which ran from October 2023 to March 2025, preyed on seven victims between March and August 2024, using manipulation and money laundering across multiple cryptocurrency platforms.

Thirteen individuals now face charges, with arrests spanning Auckland, Wellington, and California. The New Zealand suspect, accused of racketeering, conspiracy to commit wire fraud, and money laundering, has been granted bail and is set to reappear in court on July 3. What makes this case particularly noteworthy is not just the arrests but the extravagant lifestyle the defendants allegedly funded with their ill-gotten gains.

Imagine spending $9 million on exotic cars, hundreds of thousands on luxury goods, and up to $500,000 per evening on nightclub services. The defendants also hired private security guards and secured high-end rental properties in Los Angeles, the Hamptons, and Miami. This wasn’t just a scam; it was a lifestyle.

The Scam’s Operation

The operation began with friendships developed on online gaming platforms. These relationships evolved into a criminal network with roles ranging from database hackers to residential burglars. The scammers used social engineering, a technique to trick people into giving away personal information or money, to deceive their victims. They cold-called victims, convincing them their accounts were under cyberattack, and purchased databases on the dark web to identify valuable targets.

The stolen cryptocurrency was laundered through various methods, including “peel chains,” a technique of moving money in small amounts to different accounts to hide its source, pass-through wallets, and virtual private networks (VPNs) to obscure the funds’ origins. This level of sophistication highlights the challenges law enforcement faces in dismantling such networks.

Law Enforcement Response

U.S. Attorney Jeanine Ferris Pirro emphasized the need for coordinated efforts among law enforcement agencies to combat these international crimes:

“The complexity and international nature of this scam underscore the importance of cooperation across borders to effectively tackle such crimes.”

FBI Special Agent in Charge Sean Ryan stressed the importance of public awareness and vigilance against social engineering tactics:

“We must remain vigilant against social engineering tactics used in cryptocurrency scams to protect ourselves and our communities.”

Executive Special Agent in Charge Kareem A. Carter of IRS-CI noted the significance of tracing and recovering stolen cryptocurrency through advanced forensic techniques:

“Our ability to trace and recover stolen cryptocurrency is crucial in dismantling these sophisticated criminal networks.”

Human Toll and Broader Implications

The personal and financial impact on the victims is profound, serving as a stark reminder of the risks within the crypto ecosystem. While the promise of Bitcoin and blockchain technology to revolutionize finance is undeniable, we must also acknowledge and address the risks and challenges that come with this new frontier.

Despite the arrests, the story doesn’t end there. Malone Lam, one of the defendants, allegedly continued the scam while in pretrial detention, adding a layer of complexity to the tale. This persistence underscores the ongoing battle against cryptocurrency scams and the need for robust regulatory and enforcement measures.

Key Questions and Takeaways

• What was the scale of the cryptocurrency scam?

  The scam involved stealing $265 million from seven victims.

• Who was involved in the investigation and arrests?

  The FBI led the probe, with cooperation from New Zealand’s Financial Crime Group. Arrests were made in Auckland, Wellington, and California.

• What charges were filed against the suspects?

  The suspects face charges of racketeering (RICO), conspiracy to commit wire fraud, and conspiracy to commit money laundering.

• How did the defendants use the stolen funds?

  The defendants allegedly used the funds to buy exotic cars, luxury goods, and high-end rental properties, as well as funding an extravagant lifestyle.

• When is the next court appearance for the New Zealand suspect?

  The New Zealand suspect is scheduled to reappear in court on July 3.

• What additional indictments were announced?

  A superseding indictment was unsealed, charging 12 additional individuals, both American and foreign nationals, for their alleged participation in the scam.

This case serves as a sobering reminder of the dark side of the crypto world, where the promise of decentralization and financial freedom can be exploited by those with malicious intent. While we champion the potential of Bitcoin and blockchain technology to revolutionize finance, we must also acknowledge and address the risks and challenges that come with this new frontier. The fight against scams like these is crucial to preserving the integrity of the cryptocurrency ecosystem and ensuring it remains a force for good.