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The US has seized a record $15 billion in bitcoin and is going after online scammers based in Asia who’ve been targeting unsuspecting victims across the globe.
The seizure of 127,271 bitcoins represents the “largest ever forfeiture action,” according to the Justice Department (DoJ), which has linked the cryptocurrency to proceeds from organized crime groups in Cambodia dedicated to perpetuating online scams.
“Today the FBI and partners executed one of the largest financial fraud takedowns in history,” added FBI Director Kash Patel.
As part of the seizure, the DoJ is charging Chen Zhi, a 38-year-old Cambodian and UK national, with wire fraud conspiracy and money laundering conspiracy. He's accused of running the criminal activity through his company, Prince Holding Group, a major business conglomerate in Cambodia. Zhi has not been apprehended.
Although Prince Holding Group says it focuses on real estate, along with financial and consumer services, the DoJ alleges that Chen, a former Chinese citizen, used his company to create compounds in Cambodia dedicated to harnessing slave labor to conduct the online scams.
“Individuals held against their will in the compounds engaged in cryptocurrency investment fraud schemes, known as ‘pig butchering’ scams, that stole billions of dollars from victims in the United States and around the world,” the DoJ added.
(Credit: DoJ)Investigators have long traced many of today’s online romance and investment scams to compounds based in Southeast Asia, including Myanmar and Cambodia. Tuesday’s announcement is the largest crackdown yet from the US, which describes Prince Holding Group as "a criminal enterprise built on human suffering.”
Since 2015, Prince Holding Group has been allegedly raking in billions by “trafficking hundreds of workers and forcing them to work in compounds in Cambodia and execute the scams, often under the threat of violence,” the DoJ adds. The result has been an onslaught of scams targeting US users, many of whom have been tricked into depositing their funds through fraudulent cryptocurrency investment schemes.
It appears federal investigators have uncovered evidence that Zhi was directly involved in managing the scam compounds, citing carefully managed documents. For example, he allegedly possessed images “of Prince Group’s violent methods, including photographs depicting beatings and other methods of torture” to compel workers at the compounds to obey.
(Credit: DoJ)The 25-page indictment against Chen chronicles his suspected criminal activities and suggests federal investigators subpoenaed access to his online accounts, revealing the incriminating evidence.
"The indictment of mastermind Chen Zhi shows that we can identify, investigate, and prosecute the highest levels of transnational organized crime," added Erin West, a former California deputy district attorney who's been urging governments and companies to crack down on online scams based in Asia.
To further crack down, the US and UK have imposed sanctions on 146 targets within Prince Holding Group, barring Western companies and banks from conducting transactions with the Cambodian company. The sanctions target not only other executives at Prince but also other businesses tied to the conglomerate.
It's unclear when officials seized the $15 billion in bitcoin. According to cryptocurrency tracking firm Elliptic, it may have occurred last year. We also don't know what will happen to the seized funds. A spokesperson for Justice Department declined to comment on if the bitcoin will be used to reimburse victims of these online scams. But federal officials still need to officially take over the bitcoin through the civil forfeiture procedure, when formal proceedings may have only begun this Tuesday.
Prince Holding Group didn't immediately respond to a request for comment. But in the past, the company has denied fueling criminal activities.