Sugar Land resident sent to prison for Bitstamp cryptocurrency fraud scheme

HOUSTON – A 37-year-old man has been sentenced for aggravated identity theft in connection with a scheme to fraudulently obtain and launder more than $500,000, announced U.S. Attorney Alamdar S. Hamdani.

Xiaofei Chen pleaded guilty Oct. 12, 2023.

U.S. District Judge Alfred H. Bennett has now ordered Chen to serve 24 months in federal prison to be immediately followed by one year of supervised release. At the hearing, Chen apologized for his criminal conduct and told the court he regretted his actions.

“The emergence of cryptocurrency has revolutionized finance, but has also provided a new playground for identity theft and financial fraud,” said Hamdani. “Whether the stolen money is counted in dollars or bitcoins, the Southern District’s prosecutors will aggressively prosecute identity thieves and fraudsters and not rest until the offenders are behind bars.”

Chen had obtained the name, driver’s license and banking account of a known victim. Chen then arranged a fraudulent wire of $520,000 from that person’s checking account and opened a Bitstamp cryptocurrency exchange account using the victim’s information without consent.

Bitstamp is an online currency exchange where individuals can covert monies into Bitcoin and other cryptocurrency. It is based in Luxembourg and headquartered in London, United Kingdom.

Chen used the Bitstamp and other cryptocurrency accounts to convert the proceeds into Bitcoin. He then laundered the Bitcoin through numerous transactions.   

He was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

FBI conducted the investigation. Assistant U.S. Attorneys Christian Latham and Belinda Beek prosecuted the case.