Chinese National Sentenced to 40 Months in U.S. for Crypto ’Pig Butchering’ Money Laundering; $2.3M Seized
A Chinese national, Fei Liao, was sentenced to 40 months in federal prison by a U.S. district judge (J. Campbell Barker) on Feb. 19, 2026, after pleading guilty to conspiring to launder proceeds from cryptocurrency investment scams. The Eastern District of Texas U.S. Attorney’s Office announced the case; the investigation was led by the U.S. Secret Service (Tyler field office) and prosecuted by federal AUSA Robert Austin Wells. Authorities say Liao helped launder funds from “pig butchering” scams via shell companies and bank accounts. The court ordered forfeiture of over $2.3 million in seized funds and restitution exceeding $2.8 million to victims. Enforcement agencies reminded victims to report incidents to the Internet Crime Complaint Center (IC3) and to preserve platform names, crypto addresses, transaction hashes, bank details and communications. Primary keywords: crypto scam, money laundering, pig butchering, forfeiture. Secondary/semantic keywords included for SEO: cryptocurrency fraud, victim restitution, U.S. Secret Service, Eastern District of Texas. This case underscores ongoing enforcement against crypto-related money laundering and the importance for traders and service providers to monitor AML compliance and suspicious-activity reporting.
Bearish
This enforcement action is bearish for crypto market sentiment because it highlights criminal activity tied to cryptocurrency and increased regulatory/legal risk. High-profile money-laundering convictions, large forfeitures ($2.3M seized, $2.8M restitution), and continued U.S. law-enforcement activity tend to raise fears about tighter scrutiny, potential exchange/customer due diligence, and short-term liquidity or flow disruptions—especially for platforms or tokens perceived as being used for illicit transfers. Traders may see increased volatility and risk-off positioning following such headlines; exchanges and on/off ramps could tighten KYC/AML controls, temporarily slowing fiat-crypto flows and dampening speculative momentum. Historically, large criminal enforcement actions (e.g., exchange seizures, mixer shutdowns) produce short-term negative price pressure and increased volatility, though they rarely change long-term fundamentals for major, well-regulated assets. Long-term impact is likely neutral to mildly negative for risky, low-liquidity altcoins associated with fraud, while regulated large-cap assets rebound as compliance improves and confidence in regulated infrastructure increases.