The United States has just made the largest digital asset seizure in American history – a whopping $15 billion in bitcoin – from an enormous international scam network said to have been run by Cambodian businessman Chen Zhi, a Chinese national and the head of Prince Holding Group.
The operation, reportedly based in Cambodia but with tentacles stretching far further afield, is accused of operating a vast ‘pig butchering’ scam, where online fraudsters lure victims into fake investment schemes using social media and messaging apps.
The ‘pig butchering’ scam got its name because the scammers would “fatten up” their victims by pretending to be friendly and trustworthy before swiping their cash.
Prosecutors claim that the scams have already raked in billions worldwide and left thousands of trafficked workers trapped in ghastly conditions in makeshift prison camps.
“(This is) one of the largest investment fraud operations in history,” said Joseph Nocella, the U.S. Attorney for New York’s Eastern District. “Prince Group’s investment scams have caused billions of dollars in losses and untold misery to victims around the world.”
According to the prosecutors, trafficked individuals, many from neighboring Asian countries, were coerced into creating fake online personas and convincing victims to invest in fake digital asset platforms.
“In reality, the funds were stolen from the victims and laundered for the benefit of the perpetrators,” prosecutors said. Victims would typically be lulled into a false sense of security by months of friendly or romantic chat – only to find out later that their savings had been siphoned off.
At the heart of the operation was Chen Zhi – aka ‘Vincent’ or ‘Prince Chen’ – who the DOJ accuses of overseeing a vast network of crime, including people-trafficking and money laundering.
And it all happened under the name of “the Prince Group” – a Chinese conglomerate which apparently was serving as a front for one of Asia’s biggest transnational crime syndicates.
Inside some of the most heavily guarded camps, investigators discovered the grim reality of thousands of people being held against their will. Some were beaten or tortured if they refused to play along with the scams.
The DOJ is calling these places modern slavery scam centers and has described the conditions inside as a toxic mix of human trafficking, financial scams and money laundering – a real one-stop shop for villains.
U.S. Attorney General Pamela Bondi called the case “one of the most significant strikes ever against the global scourge of human trafficking and cyber-enabled financial fraud.”
They say Chen used his influence to grease the wheels of his operation – buying off corrupt officials and using his business empire to launder the cash.
The Prince Group, it turns out, had more than 100 subsidiaries in 30 countries – everything from shell companies to luxury resorts, banks and real estate firms.
The DOJ confirmed that about 127,271 BTC were seized from the digital wallets controlled by Chen’s network.
The bitcoin are now in the U.S. government’s custody pending forfeiture proceedings. Officials believe these funds were laundered through thousands of blockchain addresses to hide their origin.
This is the largest financial seizure in U.S. history, bigger than the 95,000 bitcoin Bitfinex hack in 2022.
The British government also joined in, sanctioning Chen Zhi, Prince Group and 146 affiliated individuals and entities.
U.K. Foreign Secretary Yvette Cooper said, “The masterminds behind these horrific scam centers are ruining the lives of vulnerable people and buying up London homes to store their money.”
Analysts have noted an interesting twist: the seized bitcoin may be linked to a 2020 theft from a Chinese mining company called Lubian.
Related: 127,000 BTC Stolen | Biggest Bitcoin Heist in History That Went Unnoticed
According to blockchain analytics firm Elliptic, the same bitcoin addresses are connected to both cases. The DOJ now lists Lubian as part of Chen’s laundering network, possibly using mining operations to wash stolen coins.
It’s still unclear how Chen Zhi and Lubian collaborated or how their assets became intertwined.
How the U.S. got access to the bitcoin wallets is also unclear. On-chain data shows the U.S. government now controls the private keys to wallets thought to be unhosted. Some analysts think law enforcement cracked the wallet keys in some way or found intermediaries who held them.
After the seizure, the U.S. government’s total bitcoin holdings will be around 324,625 BTC, valued at over $36 billion. These coins are part of the Strategic Bitcoin Reserve (SBR) – a new initiative to hold confiscated bitcoin as a national asset instead of selling it.
Chen Zhi, 38, is at large. If convicted, he’ll face up to 40 years in prison for wire fraud and money laundering conspiracy.
