Sugar Land Man Sentenced to Federal Prison for Aggravated Identity Theft and Bitstamp Crypto Scheme

Xiaofei Chen, a 37-year-old man from Sugar Land, Texas, has been sentenced to 24 months in federal prison for aggravated identity theft in connection with a scheme to fraudulently obtain and launder over $500,000, announced U.S. Attorney Alamdar S. Hamdani.

Chen pleaded guilty on October 12, 2023, and U.S. District Judge Alfred H. Bennett has now ordered him to serve 24 months in federal prison, followed by one year of supervised release. During the hearing, Chen expressed regret for his criminal conduct and apologized to the court.

The charges stemmed from Chen’s actions in obtaining the name, driver’s license, and banking account information of a known victim. He orchestrated a fraudulent wire transfer of $520,000 from the victim’s checking account and opened a Bitstamp cryptocurrency exchange account without consent.

Bitstamp, an online currency exchange based in Luxembourg with headquarters in London, United Kingdom, allows individuals to convert currencies into Bitcoin and other cryptocurrencies.

Chen utilized the Bitstamp and other cryptocurrency accounts to convert the ill-gotten gains into Bitcoin, which he then laundered through numerous transactions. Despite the sentence, Chen was permitted to remain on bond and will voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

“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.”

The investigation into Chen’s activities was conducted by the Federal Bureau of Investigation (FBI).