Written by: Xiao Za Legal Team
In October 2025, the U.S. Department of Justice announced the seizure of 127,000 bitcoins belonging to Chen Zhiming, the founder of the Cambodian Prince Group, causing a huge stir in the global cryptocurrency sector.
This batch of digital assets, which once had a market value of up to $15 billion, transitioned from "victim assets" stolen in 2020 to "involved subjects" identified in 2025. This not only turned Chen Zhi from a victim into a multinational defendant but also exposed many deep-seated contradictions in cross-border law enforcement and Bitcoin regulation in the digital economy era.
The Xiao Za team, through an overview of the "Chen Zhi" case, explores the technical truths and legal controversies behind this case, revealing the challenges and cooperation shortcomings in transnational crime governance in the digital age by introducing discussions on issues related to cryptocurrency private keys, providing an important sample for examining the legal positioning and regulatory path of cryptocurrencies.
Case Analysis
On December 29, 2020, a major hacking incident occurred at the LuBian mining pool, resulting in the theft of a total of 127,272.06953176 bitcoins (valued at approximately $3.5 billion at the time, now worth $15 billion). The holder of this massive amount of Bitcoin was none other than Chen Zhi, the chairman of the Cambodian Prince Group.
After the hacking incident, Chen Zhi and his Prince Group repeatedly issued messages on the blockchain in early 2021 and July 2022, appealing to the hackers to return the stolen bitcoins and expressing a willingness to pay a ransom, but received no response.
Strangely, after the theft, this large amount of Bitcoin remained dormant in a wallet address controlled by the attackers for four years, with almost no movement. This clearly does not align with the typical behavior of hackers eager to cash out for profit, but rather resembles a precise operation orchestrated by a "state-level hacking organization." It wasn't until June 2024 that this stolen Bitcoin was transferred to a new wallet address, where it remains untouched to this day.
On November 9, 2025, the National Computer Virus Emergency Response Center's "Technical Traceability Analysis Report" explicitly pointed out that the core reason for the "theft" of LuBian mining pool assets was the lack of technical compliance. The mining pool failed to generate private keys according to the industry-standard 256-bit binary random number standard, instead using a 32-bit binary random number combined with the non-encrypted and insecure MT19937-32 pseudo-random number generator, significantly reducing the difficulty of cracking the private key, with a theoretical cracking time of only 1.17 hours. This systemic vulnerability provided an opportunity for attackers to precisely gain control of the assets.
On-chain data shows that after the assets were transferred in December 2020, they did not undergo the rapid splitting and cashing out typical of "stolen" assets, but remained dormant in specific wallet addresses for four years. In 2023, a vulnerability exposed by the overseas security research team MilkSad directly linked the 25 target addresses in the U.S. Department of Justice's indictment to the address attacked at the LuBian mining pool. On-chain analysis by ARKHAM further confirmed that these assets ultimately flowed to a wallet address controlled by the U.S. government, indicating that the U.S. had effectively controlled this batch of assets even before the judicial seizure in 2025.
Dual Controversies of Jurisdiction and Liability Recognition
In October 2025, the U.S. Department of Justice officially announced the completion of the seizure process for these 127,000 bitcoins. Notably, the U.S. did not use traditional criminal extradition procedures but chose to initiate civil forfeiture proceedings, treating the bitcoins themselves as "defendants," requiring only to prove that the assets "likely originated from illegal activities" to complete the seizure. At the same time, the U.S. claimed jurisdiction over the case based on "the case involves 259 American victims with losses of approximately $18 million," bypassing many obstacles in cross-border law enforcement through the "minimum contacts principle."
This outcome triggered a chain reaction: Chen Zhi denied the allegations, claiming the assets were legally obtained; the LuBian mining pool stated it would pursue the stolen assets through legal means; and the global cryptocurrency market experienced a brief fluctuation, prompting investors to reassess the "anonymity" and "security" of virtual currencies.
As of now, this batch of bitcoins is still held in custody by the U.S. Department of Justice, and its final ownership and disposal method are still in legal proceedings. However, this case has set a record for the scale of cross-border seizure of cryptocurrencies, becoming a landmark case in global virtual currency law enforcement.
(1) Core Controversy
During the trial of the Chen Zhi case, the legal attribute of Bitcoin became the primary focus, a question that has always been contentious globally. In China's judicial practice, its property attribute is recognized, considering Bitcoin to have management potential, transfer potential, and legal protection value, categorizing it as property data; the Hangzhou Internet Court has also ruled in civil cases that Bitcoin possesses property attributes and should be legally protected.
However, in criminal judicial practice, the classification of Bitcoin remains ambiguous. In this case, the U.S. classified it as "proceeds of crime," including it in the scope of civil forfeiture, which sharply contrasts with its "securities classification" in the Ripple case, reflecting the contextual characteristics of virtual currency classification.
From the perspective of China's legal framework, Bitcoin does not have the status of legal tender, and its trading and speculation activities are considered illegal financial activities, but this does not negate its protected status as "virtual property." This institutional conflict between "trading prohibition" and "property protection" is also evident in the Chen Zhi case.
Theoretical circles hold three main viewpoints: the "computer information system data theory" posits that Bitcoin is essentially electronic data and does not possess the material attributes of traditional property; the "property theory" argues that it has economic value and disposability and should be protected as property; the "prohibited goods theory" contends that it fosters illegal transactions and should be classified as legally prohibited items. The conflict among these three viewpoints essentially reflects the adaptation challenges between digital economic innovation and traditional legal systems.
(2) Procedural Focus
The biggest legal controversy raised by the Chen Zhi case lies in the U.S. claim of cross-border jurisdiction. In this case, the involved party, Chen Zhi, is a Cambodian businessman, with the main actions occurring in Southeast Asia, and the victim mining pool located in China, while the U.S. claims comprehensive jurisdiction based solely on the "existence of 259 American victims," a tenuous connection that has sparked widespread discussion in the international community regarding "judicial long-arm jurisdiction."
From the principles of international law, the exercise of jurisdiction is typically based on territorial principles, personal principles, or protective principles. The "minimum contacts principle" employed by the U.S. in this case originates from its domestic civil procedure law, applying this principle to cross-border virtual currency cases, breaking through traditional international law jurisdictional boundaries. This approach may exacerbate jurisdictional conflicts, and if countries follow suit, it could lead to a chaotic situation of "jurisdictional competition" in the virtual currency field.
In comparison to similar cases in China, in the "Lantian Gerui Electronic Technology Co., Ltd. (Lantian Gerui) Bitcoin cross-border recovery case," the main perpetrator Qian Zhimin converted 40 billion yuan of involved funds into Bitcoin and fled to the UK. Chinese judicial authorities had to initiate civil recovery procedures in the UK based on the China-UK judicial cooperation mechanism through the "Proceeds of Crime Act 2002," facing multiple obstacles such as legal classification differences and evidence recognition difficulties. The comparison of the two cases highlights the stark differences in the handling outcomes of cross-border virtual currency cases due to varying judicial philosophies and enforcement models in different countries.
(3) Liability Recognition
In terms of criminal liability recognition, the Chen Zhi case involves multiple suspicions of theft, money laundering, and more. However, due to the cross-border nature of the case and the particularity of virtual currencies, the application of traditional criminal charges faces challenges. In China's judicial practice, similar cases are often convicted and punished under charges such as illegal absorption of public deposits, money laundering, or fraud, as seen in the Jingmen "first virtual currency case," where the criminal gang was ultimately recognized as engaging in cross-border online gambling through the circulation of virtual currency. In contrast, the U.S. avoided complex criminal convictions in this case, opting for civil forfeiture procedures to quickly achieve asset recovery, reflecting the differentiated strategies of different judicial systems in addressing virtual currency crimes.
In Conclusion
The Chen Zhi Bitcoin case reflects the opportunities and challenges of the virtual currency era. Virtual currencies like Bitcoin have innovated the way value is transmitted through blockchain technology, but their anonymity and decentralization characteristics have also become tools for criminals, posing risks to financial security and social stability.
Currently, global cryptocurrency regulation is in an exploratory phase, and we cannot deny the value of technological innovation due to risks, nor can we allow risks to spread unchecked. China's regulatory path of "strictly preventing risks and legally protecting" aligns with the overall requirements for financial security while leaving room to respond to technological changes. As on-chain regulatory technology matures, legal systems improve, and international cooperation deepens, the governance framework for virtual currencies will gradually become clearer.
For ordinary people, the warning significance of the Chen Zhi case is particularly profound: the "anonymity" of virtual currencies is relative, and "security" is fragile. Any attempt to use virtual currencies to evade regulation and seek illegal profits will ultimately face legal sanctions. In the wave of digital financial innovation, only by adhering to legal bottom lines and respecting market risks can we truly enjoy the dividends brought by technological progress.
The story of Bitcoin continues, and finding a balance between innovation and risk, while building a regulatory system that is both inclusive and prudent, will be a long-term issue faced by countries around the world.
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