Original Title: Feds Seize Record-Breaking $15 Billion in Bitcoin From Alleged Scam Empire
Original Source: Wired
Original Translation: Luffy, Foresight News
Rhythm Note: On October 14, the U.S. District Court for the Eastern District of New York (EDNY) reported that the U.S. government is seeking to confiscate 127,000 Bitcoins seized during operations against the Prince Group in Cambodia, valued at over $14 billion at current prices. If this confiscation is successfully executed, the U.S. government will become the entity holding the largest amount of Bitcoin. Here is a detailed analysis of this case:
Over the past five years, criminals behind global pig-butchering scams have stolen billions of dollars from around the world. Now, law enforcement has launched one of the largest operations to date against this massive fraud industry, targeting operators of modern slavery scam hubs in Southeast Asia. In the region, hundreds of thousands of human trafficking victims are forced to engage in fraudulent activities for criminal groups.
On Tuesday, U.S. and U.K. officials took coordinated action against a large criminal organization in Cambodia and its leader, who is said to operate several notorious scam centers in the country. The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced that it has imposed financial sanctions on 146 targets associated with the newly identified Prince Group transnational criminal organization, covering individuals and shell companies related to this criminal empire. As part of a comprehensive operation involving the Federal Bureau of Investigation (FBI), the U.S. Department of Justice (DOJ) also seized nearly 130,000 Bitcoins, which were valued at approximately $15 billion at the time of the announcement—this is the largest cryptocurrency seizure in U.S. history.
OFAC pointed out that the Prince Group criminal entity consists of the Cambodian domestic company Prince Holding Group, its chairman and CEO Chen Zhi, and its associates and business partners. The company claims to be one of the largest corporate groups in Cambodia, with businesses in real estate development and financial services. However, the DOJ alleges that Chen Zhi and other executives secretly transformed the Prince Group into one of Asia's largest transnational criminal organizations, operating at least 10 scam hubs within Cambodia.
"As alleged, the defendants controlled one of the largest investment fraud networks in history, fueling an illegal industry that has become rampant," said Joseph Nocella Jr., U.S. Attorney for the Eastern District of New York, in a statement. "The investment fraud perpetrated by the Prince Group has caused billions of dollars in losses to victims worldwide and has brought immeasurable suffering." The DOJ revealed that Chen Zhi has not yet been arrested and remains at large.
U.K. Foreign Secretary Yvette Cooper stated, "The masterminds behind these horrific scam hubs are destroying the lives of vulnerable people while hiding their ill-gotten gains in properties in London." The U.K. has also imposed financial sanctions on Chen Zhi, the Prince Group, and other associated entities, freezing London commercial assets and properties allegedly linked to Chen Zhi, including a £12 million (approximately $16 million) mansion in North London and a £100 million (approximately $133 million) office building in the City of London.
Journalists who emailed the media contact listed on the "Prince Holding Group" website received an immediate bounce-back.
"Today's coordinated action is the heaviest blow to Southeast Asian cybercrime groups to date," said John Wojcik, a senior threat researcher at cybersecurity company Infoblox, focusing on Asian affairs. He previously tracked scam hubs and Southeast Asian cybercrime at the United Nations Office on Drugs and Crime (UNODC). Wojcik believes that the group "is by no means an ordinary criminal gang—it is one of the largest cybercrime and money laundering entities in the region and a leader in the field of criminal fintech and infrastructure."
However, there is an unresolved twist in the case. Cryptocurrency tracking company Elliptic pointed out in a blog post on Tuesday that the Bitcoins seized by U.S. law enforcement appear to be the same funds stolen from a Chinese cryptocurrency mining company called Lubian in 2020. The current indictment describes Lubian as part of Chen Zhi's money laundering network, which may be a scheme to transfer fraud proceeds to cryptocurrency mining hardware, generating "clean new coins" with no criminal record.
It remains unclear who stole these funds in 2020 or whether a theft actually occurred. "It is possible that Chen Zhi fabricated the theft as part of a money laundering scheme to obfuscate the flow of funds," said Tom Robinson, co-founder of Elliptic. "The second possibility is that the theft did occur, and the perpetrators may be the U.S. government, but more likely it was someone else." Robinson stated that U.S. law enforcement may have subsequently tracked down the thief and seized the funds from them in some manner.
Regardless of the cryptocurrency mining money laundering and the mysterious theft, the indictment accuses Chen Zhi of being a core participant in the Chinese-language pig-butchering ecosystem. Over the past decade, organized crime groups active in Southeast Asia have operated dozens of scam hubs in Myanmar, Laos, and Cambodia. These hubs are often controlled by Chinese criminal groups, which lure individuals from over 60 countries to come work by posting fake job advertisements. Upon arrival at the hubs, victims often have their passports confiscated and are then forced to operate various online scams targeting people worldwide; if they refuse to comply, they may sometimes be beaten or abused. In addition to human trafficking and fraud, these scam hubs are often linked to money laundering and online gambling.
The U.S. Department of Justice's indictment against Chen Zhi and seven unnamed co-conspirators alleges that the Prince Group operates over 100 companies in 30 countries and lists several suspected affiliated subsidiaries. The indictment also mentions that some local organizations, including a network in Brooklyn, New York, have served the Prince Group. The indictment claims that since 2015, Chen Zhi and company executives have established and operated scam hubs throughout Cambodia, using their political influence in multiple countries to protect their criminal empire.
The indictment states: "Chen Zhi directly participated in the management of the scam hubs and retained records related to each hub, including documents tracking scam profits, which explicitly mention the term 'pig-butchering'," and also allegedly involved "ledgers for bribing public officials." It is claimed that a document held by Chen Zhi shows that two scam centers were equipped with 1,250 mobile phones used to operate 76,000 social media accounts. The indictment also accuses Chen Zhi of possessing images proving the use of violence against individuals trafficked to the scam hubs, with documents containing images of bleeding and beaten individuals.
The 127,271 Bitcoins seized had a market value of over $15 billion at the time of confiscation. This is the largest financial seizure in the history of the U.S. Department of Justice, setting records for both cryptocurrency and any other form of funds. The previous record for U.S. law enforcement was set in 2022 when 95,000 Bitcoins (valued at $3.6 billion) were seized, with a Manhattan couple later admitting to stealing the funds from the Bitfinex exchange; even earlier, in 2020, law enforcement seized $1 billion worth of Bitcoin allegedly stolen by an anonymous hacker from the Silk Road darknet drug market. Additionally, in June of this year, U.K. police seized 61,000 Bitcoins (valued at $6.7 billion) from a Chinese woman suspected of investment fraud, a scale that exceeded the previous U.S. record but still fell short of the amount seized in the Prince Group case.
"It is important to note that the extraordinary significance of this seizure lies not only in its scale but also in its symbolic meaning," said Ari Redbord, global policy lead at cryptocurrency tracking company TRM Labs, while pointing out that "this is still just a small portion of the illegal profits generated by scam hubs." He added, "These are not isolated fraud cases but rather factory-level operations that rely on forced labor, enhanced by the speed and scale of cryptocurrency, and interconnected through complex money laundering infrastructures spread across Cambodia, Myanmar, Laos, China, and other regions."
Redbord believes that this large-scale action strikes at the operational and financial core of the scam hub ecosystem. In recent years, researchers tracking Southeast Asian scam hubs have found that these hubs have rapidly expanded in scale and have begun to invest illegal proceeds into increasingly sophisticated fraudulent activities. Over the past two years, scam hubs have also begun to emerge outside Southeast Asia, with related bases found in the Middle East, Eastern Europe, Latin America, and West Africa.
"By targeting shell companies, banks, exchanges, and real estate that facilitate the transfer and concealment of illicit funds, the U.S. and U.K. are dismantling the economic engines that support these crimes," Redbord said, "This is what 21st-century counter-threat financial action should look like—coordinated, data-driven, and global."
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