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U.S. Department of Justice Revealed the Seizure of 127,271 Bitcoins Linked to Chinese Businessman Chen Zhi, Accused of Leading a Transnational Criminal Organization that Operated Forced Labor Camps in Cambodia, Scamming Victims Worldwide.
The United States Department of Justice announced on Tuesday (14) the largest cryptocurrency seizure in history. A total of 127,271 bitcoins, valued at approximately US$ 15 billion, surpassed the previous record of 94,000 bitcoins seized in 2022 in the case of Ilya Lichtenstein and Heather Morgan.
The digital coins belonged to Chen Zhi, also known as Vincent, a 37-year-old Chinese businessman, founder and chairman of the Prince Holding Group, a multinational conglomerate based in Cambodia. According to information from the Department of Justice, the assets are already in custody of the U.S. government, pending judicial review.
With this seizure, the U.S. government increased its Bitcoin reserves to over US$ 36 billion, solidifying itself as one of the largest individual holders of the cryptocurrency in the world. The operation took place in coordination with international authorities, including the United Kingdom.
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Who is Chen Zhi and What is the Prince Group
Chen Zhi founded the Prince Holding Group in 2015, initially presented as a real estate investment and financial services company. However, according to U.S. authorities, the organization was transformed into one of the largest criminal networks in Asia.
The Chinese businessman is on the run and faces serious charges of conspiracy to commit wire fraud, money laundering, forced labor, and torture. If captured and convicted, Zhi could face up to 40 years in prison.
Alongside the seizure, the U.S. declared the Prince Group as a transnational criminal organization, imposing sanctions against Chen Zhi and various associates. The company, which appeared legitimate, operated a sophisticated structure of cybercrime on an industrial scale.
According to the Department of Justice, under Zhi’s command, the group profited billions of dollars by operating fraud camps in Cambodia, where cryptocurrency investment scams were perpetrated against victims in several countries, including Brazil.
How the Forced Labor Camps Worked
The heaviest accusation against Chen Zhi involves human trafficking and torture. U.S. authorities claim that the Prince Group trafficked hundreds of workers from various countries, forcing them to scam others under constant threat of physical violence.
“The locations had dormitories surrounded by high walls and barbed wire, functioning as actual forced labor camps,” detailed the Department of Justice in its statement. Chen Zhi is accused of directly managing these fraud centers, coordinating the criminal operations.
As the trafficked individuals came from various countries, the scams reached victims globally due to the variety of languages spoken. The scheme even had international branches, including one located in Brooklyn, New York, also victimizing individuals in the United States.
Authorities estimate that the criminal network caused billions of dollars in global losses, affecting thousands of people who lost their savings believing in false investment promises.
The “Pig Butchering” Cryptocurrency Scam
The primary fraud method employed by Chen Zhi’s organization is known as “pig butchering”. This type of digital scam involves criminals creating trust relationships with victims, usually through social networks or dating apps.
Just as pigs are raised for a long time before being butchered, in the pig butchering fraud scheme, the scammers cultivate prolonged relationships with their victims. First, they gain trust through what is called the “romance scam.”
After establishing what seems to be a genuine relationship, the criminals gradually convince the victim to invest in suspicious cryptocurrency platforms, promising astronomical returns. The scammers initially show some fictitious profits to bolster their trust, encouraging larger deposits.
When the victim finally tries to withdraw the money, they discover that the platform is fraudulent and that they have lost all of their invested value. This type of fraud has grown and turned into a multibillion-dollar industry, according to specialized blockchain analysis firms.
Sophisticated Money Laundering Techniques
The Prince Group used advanced methods to conceal the illicit origin of the funds obtained through the scams. This included political influence through bribes in various countries, as well as the formation of shell companies, online casinos, and cryptocurrency mining operations.
“They used advanced laundering techniques in blockchain, such as ‘spraying’ and ‘funneling’, which divide and recombine cryptocurrencies into thousands of addresses to hide their origin,” explained the Department of Justice. These techniques make it difficult to trace transactions, greatly complicating the identification of the money’s source.
With the illicitly obtained profits, Chen Zhi and his accomplices financed a luxurious lifestyle, including first-class international travel, yachts, private jets, expensive jewelry, high-end properties, and valuable artworks.
The contrast between the wealth flaunted by the organization’s leaders and the inhumane conditions faced by the forced workers highlights the cruelty of the criminal scheme.
How the U.S. Managed to Seize the Bitcoins
Although the U.S. government has not revealed all the details of the operation, the judicial process provides some clues about how the seizure was carried out. According to official documents, “Chen personally kept records of the wallet addresses and the seed phrases associated with the private keys.”
This suggests that the U.S. government may have gained virtual access to this sensitive data, similar to how it obtained documents and photos about tortures and beatings mentioned in other parts of the case. Some analysts point out that the bitcoins had been inactive since 2020, facilitating tracking.
The cryptocurrencies were stored in non-custodial wallets, whose private keys belonged directly to the accused. Currently, the funds remain in custody of the U.S. government while awaiting the conclusion of the judicial process.
The Department of Justice confirmed this is the largest seizure action in the institution’s history, demonstrating the commitment of U.S. authorities to combat crimes involving cryptocurrencies and transnational criminal organizations.
What Happens Now with the Seized Bitcoins
With Chen Zhi on the run, U.S. authorities have initiated a civil forfeiture action to formalize permanent possession of the seized bitcoins. The process has been filed in the Eastern District of New York.
In addition to the cryptocurrencies, authorities are also seeking to confiscate other luxury assets, including private jets and yachts acquired with money from the frauds. These assets may be auctioned later, with the proceeds going to government funds or victim compensation.
If captured, Chen Zhi will face multiple federal charges. The penalties may be cumulative, totaling decades in prison. International cooperation will be crucial in locating and capturing the Chinese businessman.
This case represents an important milestone in the fight against digital organized crime and demonstrates that even sophisticated money laundering schemes can be tracked and dismantled by authorities when there is international coordination and adequate technological resources.
And you, did you know about the “pig butchering” scam? Do you think the authorities will manage to capture Chen Zhi? Share your opinion in the comments and share this alert to help others protect themselves against this type of fraud that has already made thousands of victims worldwide!
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