A forfeiture history case by the U.S. Department of Justice (DOJ) dismantled one of the largest crypto scam operations ever, confiscating approximately 127,271 bitcoin valued at approximately $15 billion at seizure.
Federal prosecutors allege Cambodia-based Prince Holding Group owner Chen Zhi led a huge cross-border “pig butchering” scheme, netting up to $30 million per day at its peak.
Anatomy of a “pig butchering” scam
“Pig butchering” is a romance or investment scams where scammers establish relationships with targets—typically via social media or messaging platforms—before persuading them to invest large amounts of cryptocurrency. Money is sent afterward whereupon scammers vanish with the funds, leaving targets penniless. In this case, targets were trafficked to work in “phone farm” compounds in Cambodia where they recruited and defrauded targets worldwide under threat of violence.
The Prince Holding Group empire
Publicly, Prince Holding Group was introduced as a diversified conglomerate with an emphasis in real estate, banking, and consumer services. In the DOJ indictment revealed on October 14 in Brooklyn federal court, Chen Zhi secretly formed the company as an enormous criminal syndicate which crossed over more than 30 nations. Inside Cambodia, the group had ten or more highly fortified compounds where hundreds of trafficked workers were compelled to man the scam call centers.
Historic seizure and legal action
This enforcement action is the largest forfeiture in DOJ history. Prosecutors brought a civil complaint for permanent seizure of 127,271 bitcoins traced to four digital wallets owned and controlled by Chen Zhi. At the same time, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) added Prince Group to its list of transnational criminal enterprises and sanctioned 146 related individuals and entities. Sanctions were coordinated with the U.K. and assets—such as a £100 million London office building—tied to the fraud network were frozen.
Chen is still at large, thought to be in Cambodia. If he is convicted of conspiracy to commit wire fraud and money laundering, he can get up to 40 years in prison.
Scale and spoils
It was at its highest point, making up to $30 million worth of criminal proceeds per day, sending billions to unhosted bitcoin wallets and a money laundering scheme incorporating online betting and cryptocurrency mining. Prosecutors added that Chen utilized the proceeds hacked to acquire luxury London real estate, private aircraft, yachts and even a Picasso painting bought at a New York auction.
Human cost and victim toll
In addition to financial losses in the tens of billions, the fraud had severe human rights abuses. Chinese and other employees trafficked into the compounds were detained in prison-like conditions and not permitted to exit the barbed-wire encircled grounds. The victims of crypto scams, many of whom believed that they were entering into legitimate investment or romantic relationships, lost savings, retirement savings and life-altering sums.
Implications for crypto enforcement
This is one such case that accentuates law enforcement’s greater capability to track and seize illicit cryptocurrency, even where it is held in self-wallets. The DOJ collaboration with OFAC, FinCEN and international partners is an example of a concerted effort towards dismantling sophisticated cyber-fraud schemes and recovering assets for potential victim restitution.
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