The United States has just made the largest seizure of digital assets in U.S. history – a whopping $15 billion in Bitcoin – from a vast international fraud network said to be run by Cambodian businessman, Chinese national, and head of Prince Holding Group, Cheng Zhi.
The operation is based in Cambodia but reportedly has tentacles far reaching, and is accused of running a large-scale “pig butchering” scam in which online scammers use social media and messaging apps to lure victims into bogus investment schemes.
The “pig butchering” scam gets its name from the scammers “fattening up” their victims by pretending to be friendly and trustworthy before stealing their cash.
Prosecutors claim the scam has already raked in billions of dollars around the world and left thousands of trafficked workers held in deplorable conditions in makeshift prison camps.
“[This is]one of the largest investment frauds in history.” Joseph Nocera, United States Attorney for the Eastern District of New York, said: “Prince Group’s investment fraud has caused billions of dollars in losses and untold misery to victims around the world.”
Prosecutors say the trafficked individuals, many from neighboring Asian countries, were forced to create fake online personas and persuade 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.” the prosecutor said. Victims are usually lulled into a false sense of security by months of friendly and romantic conversations, only to later discover that their savings have been siphoned off.
The man at the center of the operation is Chen Zhi (also known as “Vincent” or “Chen Zhi”), whom the Justice Department accuses of overseeing a vast criminal network that includes human trafficking and money laundering.
And it all happened under the name of the Chinese conglomerate “Prince Group”, which apparently acted as a front for one of Asia’s largest transnational criminal organizations.
In some of the highest-security camps, investigators discovered the harsh reality that thousands of people were being held against their will. Some were beaten or tortured if they refused to cooperate with the scam.
The Department of Justice calls these locations Modern Slavery Fraud Centers, describing the conditions inside as veritable one-stop shops for bad actors with a toxic mix of human trafficking, financial fraud, and money laundering.
U.S. Attorney General Pamela Bondi called the case “one of the most significant attacks yet on the global scourge of human trafficking and cyber-based financial fraud.”
They allege that Chen used his influence to bribe corrupt officials and use his business empire to launder money.
Prince Group was found to have more than 100 subsidiaries in 30 countries, ranging from shell companies to luxury resorts, banks and real estate companies.
The Department of Justice confirmed that approximately 127,271 BTC was seized from digital wallets controlled by Chen’s network.
Bitcoin is currently under the control of the US government pending forfeiture proceedings. Authorities believe these funds were laundered through thousands of blockchain addresses to hide their origins.
This is the largest financial seizure in U.S. history, larger than the Bitfinex hack of 95,000 Bitcoin in 2022.
The British government joined in and sanctioned Chen Zhi, Prince Group, and 146 related individuals and entities.
Yvette Cooper, UK Foreign Secretary, said: “The masterminds behind these horrific fraud centers are ruining the lives of vulnerable people and buying up homes in London to hoard their funds.”
Analysts note an interesting development. The seized bitcoins may be linked to a 2020 theft from a Chinese mining company called Rubian.
RELATED: 127,000 BTC Stolen | The Biggest Bitcoin Heist in History That Goes Unnoticed
According to blockchain analysis firm Elliptic, the same Bitcoin address is associated with both cases. The Justice Department currently lists Rubian as part of Chen’s money laundering network, saying it may have used mining operations to launder stolen coins.
It is still unclear how Chen Zhi and Lubian worked together or how their assets became intertwined.
It is also unclear how the US gained access to the Bitcoin wallet. On-chain data shows that the US government currently controls the private keys of the wallet, which is believed to be unhosted. Some analysts believe that law enforcement has somehow cracked the wallet keys or found an intermediary holding the keys.
After the seizure, the US government’s total Bitcoin holdings will be approximately 324,625 BTC, with a value of more than $36 billion. These coins are part of the Strategic Bitcoin Reserve (SBR), a new initiative to hold confiscated Bitcoins as national assets rather than sell them.
Chen Zhi, 38, remains on the run. If convicted, he faces up to 40 years in prison for wire fraud and money laundering conspiracy.
