1.5 billion USD Bitcoin seized: The collapse of the Southeast Asian "Pig-butchering scams" empire behind it

Original Title: Feds Seize Record-Breaking $15 Billion in Bitcoin From Alleged Scam Empire

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Reprint: Mars Finance

Rhythm Note: On October 14, news from 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 in operations involving the Prince Group in Cambodia, which is worth 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 bitcoins. Below is a detailed analysis of this case:

Over the past five years, criminals behind pig butchering schemes around the world have stolen hundreds of billions of dollars from various countries. Now, law enforcement agencies have launched one of the largest operations to date targeting operators of modern slavery scam hubs across Southeast Asia. In this region, hundreds of thousands of human trafficking victims are forced to engage in fraudulent activities for criminal groups.

On Tuesday, officials from the U.S. and the U.K. took coordinated action against a large criminal organization in Cambodia and its leader, who is said to operate several notorious scam centers in Cambodia. The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced that it had implemented financial sanctions against 146 targets associated with the newly identified Prince Group transnational criminal organization, covering individuals and shell companies linked 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 by the U.S. to date.

The OFAC pointed out that the Prince Group's criminal entity is composed of the Cambodian local enterprise 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 covering real estate development and financial services. However, the Department of Justice alleges that Chen Zhi and other executives secretly transformed the Prince Group into one of the largest multinational criminal organizations in Asia, operating at least 10 scam parks within Cambodia.

“As alleged in the charges, the defendant controlled one of the largest investment fraud schemes in history, fueling an already rampant illegal industry,” said Joseph Nocella Jr., U.S. Attorney for the Eastern District of New York, in a statement. “The investment fraud of the Prince Group has caused tens of billions of dollars in losses to victims worldwide and has brought immeasurable suffering.” The Justice Department revealed that Chen Zhi has not yet been arrested and is still at large.

UK Foreign Secretary Yvette Cooper stated: “The masterminds behind these terror scam operations are destroying the lives of vulnerable people while hiding their ill-gotten gains by purchasing properties in London.” The UK has also imposed financial sanctions on Chen Zhi, the Prince Group, and other related entities, freezing what are said to be Chen Zhi's commercial assets and properties in London, including a luxury home in North London worth £12 million (approximately $16 million) and an office building in the City of London valued at £100 million (approximately $133 million).

The journalist sent an email to the media contact address listed on the “Prince Holding Group” official website, but it was immediately returned.

“Today's coordinated action is the heaviest blow to Southeast Asian cybercrime groups to date,” said John Wojcik, a senior threat researcher at cybersecurity firm Infoblox, focusing on Asian affairs. He previously tracked scam syndicates 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 crime 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, the case has an unresolved twist, as the cryptocurrency tracking company Elliptic pointed out in a blog post this Tuesday, that the Bitcoin seized by U.S. law enforcement actually seems to match the funds stolen from a Chinese cryptocurrency mining company named Lubian in 2020. The current indictment describes Lubian as part of Chen Zhi's money laundering network, which could be an alleged criminal scheme to transfer scam proceeds into cryptocurrency mining hardware, generating “clean new coins” with no criminal record.

It is still far from clear who stole these funds in 2020, or whether a theft actually occurred. “It is possible that Chen Zhi fabricated the theft case as part of a money laundering scheme to confuse the flow of funds,” said Tom Robinson, co-founder of Elliptic. “The second possibility is that the theft did indeed happen, and the perpetrator may be the U.S. government, but it is more likely to be someone else.” Robinson stated that U.S. law enforcement may have subsequently tracked down the thief and seized these funds from them in some way.

Disregarding the issues of cryptocurrency mining money laundering and mysterious theft cases for now, the indictment accuses Chen Zhi of being a core participant in the “pig butchering” ecosystem in the Chinese-speaking world. Over the past decade, organized crime groups active in Southeast Asia have operated dozens of scam parks in Myanmar, Laos, and Cambodia. These parks are mostly controlled by Chinese criminal organizations, which lure individuals from over 60 countries to work through false job advertisements. Once victims arrive at the parks, their passports are often confiscated, and they are subsequently forced to engage in various types of online scams, targeting individuals worldwide; refusal to comply can sometimes result in beatings or abuse. In addition to human trafficking and fraud, these scam parks are also often linked to money laundering and online gambling.

The indictment by the U.S. Department of Justice against Chen Zhi and seven unnamed accomplices alleges that the Prince Group operates over 100 companies in 30 countries and lists several allegedly affiliated subsidiaries. The indictment also mentions that some local organizations, including a network in Brooklyn, New York, have served the Prince Group. The charges state that since 2015, Chen Zhi and company executives have established and operated scam parks throughout Cambodia and used their political influence in multiple countries to protect their criminal empire.

The indictment states: “Chen Zhi directly participated in the management of the scam park and retained relevant records for each park, including documents tracking scam profits, which explicitly mention the term 'killing pigs'.” It is also alleged that there exists a “ledger for bribing public officials.” It is claimed that a document held by Chen Zhi shows that the two scam centers were equipped with 1,250 mobile phones, used to control 76,000 social media accounts. The indictment also accuses Chen Zhi of holding images that prove the Taizi Group used violent means against individuals sold to the scam parks, with documents containing images of bleeding and beaten individuals.

The 127,271 bitcoins seized this time had a market value of over $15 billion at the time of confiscation. This marks the largest seizure of funds in the history of the U.S. Department of Justice, setting a record for both cryptocurrencies and any other form of funds. Previously, the record held by U.S. law enforcement was set in 2022 when 95,000 bitcoins (valued at $3.6 billion) were seized, with a couple from Manhattan subsequently admitting to stealing funds from the Bitfinex exchange; even earlier in 2020, law enforcement had seized $1 billion in bitcoins allegedly stolen by an anonymous hacker from the Silk Road dark web drug market. Additionally, in June of this year, British police seized 61,000 bitcoins (valued at $6.7 billion) from a Chinese woman suspected of investment fraud, an amount that exceeded the previous U.S. record but was still less than half of the amount seized in this Prince Group case.

“It should be noted 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 firm TRM Labs, while pointing out that “this is still just a small portion of the illegal profits made in the scam park.” He added, “These are not isolated scams, but 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 operation directly targets the operational and financial core of the scam park ecosystem. In recent years, researchers tracking scam parks in Southeast Asia have found that these parks have rapidly expanded and are using illegal proceeds to invest in increasingly sophisticated scam activities. Over the past two years, scam parks have also begun to emerge outside of Southeast Asia, with relevant 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 exactly what 21st-century anti-threat financial action should look like—coordinated, data-driven, and global.”