California Man Claims $2.1 Million Loss in Cryptocurrency Fraud Scheme
On Tuesday, September 10, 2024, Hector Gustav Gutierrez filed a complaint in the US District Court for the Central District of California against a defendant identified as “Yan Shi Zhang,” along with several unnamed co-defendants, alleging theft of cryptocurrency valued at over $2.1 million. The complaint outlines a sophisticated scheme involving fraud and conversion that resulted in the loss of approximately 33.8 Bitcoin (BTC) from Gutierrez.
The lawsuit claims that Gutierrez fell victim to what is known as a “pig butchering” scam, a type of fraudulent investment scheme originating from Southeast Asia. According to the complaint, such scams have proliferated into a billion-dollar industry, utilizing deceitful tactics to lure victims into investing their cryptocurrency. Gutierrez alleges that the operations behind these scams mimic legitimate trading platforms, leading individuals to unknowingly deposit their assets into fraudulent exchanges.
In the complaint, Gutierrez states that he was introduced to Zhang on September 14, 2023, through an individual claiming to be Zhang’s niece. Initial communications between Gutierrez and Zhang took place via video call, but subsequent interactions were conducted through the messaging platform Telegram. Zhang allegedly presented himself as an experienced cryptocurrency broker affiliated with Binance, a reputable cryptocurrency exchange, claiming to offer investment education and advice.
Gutierrez was instructed to create an account on the Kraken exchange, where he purchased Bitcoin and subsequently transferred it to a website identified as www.coinberryf.com. This site was purportedly a trusted exchange, but Gutierrez later discovered it to be fraudulent. The complaint indicates that Zhang used various methods to instill confidence in Gutierrez, including showcasing purported successful trades and returns.
As the relationship progressed, Gutierrez was led to believe that his investments were yielding significant profits. By December 2023, he was convinced that his portfolio had grown from approximately $1.08 million to about $6.5 million, based on Zhang’s representations and the fraudulent website’s displays. However, when Gutierrez attempted to withdraw his funds, he encountered complications, including restrictions on his account and demands for additional deposits purportedly required for account verification.
The complaint reveals that Gutierrez conducted a total of 16 transactions from his Kraken account to the fraudulent exchange between September and December 2023, ultimately transferring around 33.8 BTC valued at $2,152,905.67 at the time of the filing. After realizing he had been defrauded, Gutierrez hired forensic experts to trace his stolen assets on the blockchain, which led to the identification of various cryptocurrency wallets linked to Zhang and his co-defendants.
In his legal action, Gutierrez is pursuing multiple counts against the defendants, including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), conversion, unjust enrichment, and conspiracy. He alleges that Zhang and the unnamed co-defendants conspired to conduct fraudulent activities that affected interstate and foreign commerce.
The complaint specifies that Zhang and his associates engaged in a pattern of racketeering by utilizing telecommunications and internet communications to defraud Gutierrez, thereby fulfilling the criteria outlined in federal racketeering statutes. Gutierrez’s legal team seeks damages, including statutory trebled damages under RICO, punitive damages, and recovery of costs and attorney fees.
Additionally, Gutierrez is requesting the imposition of a constructive trust on the cryptocurrency assets that he alleges were wrongfully obtained by the defendants. He claims that these assets, now spread across various exchanges, should be returned to him as they constitute identifiable property that was taken without his consent.
Please contact BlockTribune for access to a copy of this filing.
