TLDR
- Federal prosecutors indicted Chen Zhi, founder of Cambodia’s Prince Group, for operating pig butchering cryptocurrency scams
- Authorities confiscated 127,271 Bitcoin valued at $14.4 billion, the largest digital asset seizure in US history
- The forfeiture could expand US Bitcoin reserves from 198,000 to 325,000 BTC if Zhi is convicted
- Prince Group trafficked workers to Cambodia compounds where they executed crypto fraud under threats of violence
- Treasury Department sanctioned Prince Group and disconnected Huione Group from US financial systems
Federal authorities unsealed criminal charges against Chen Zhi on Tuesday in connection with a massive cryptocurrency fraud operation. The indictment could result in the largest addition to America’s Bitcoin reserves in history.
The US Justice Department seized 127,271 Bitcoin from Prince Group, a Cambodia-based organization accused of running pig butchering scams. The confiscated cryptocurrency is worth approximately $14.4 billion. This marks the biggest crypto seizure ever conducted by US law enforcement.
Zhi faces wire fraud conspiracy and money laundering conspiracy charges in New York’s Eastern District Court. He could receive up to 40 years in prison if convicted. The defendant remains at large following the indictment announcement.
Forced Labor Compounds and Scam Operations
Prince Group operated facilities in Cambodia where hundreds of trafficked individuals were forced to carry out cryptocurrency scams. Workers in these barbed-wire compounds faced violence threats if they refused to participate. The schemes primarily targeted American victims through pig butchering operations, where scammers build fake romantic relationships to steal crypto assets.
Attorney General Pamela Bondi described the action as a major blow against human trafficking and cyber financial fraud. The Treasury Department simultaneously designated Prince Group as a transnational criminal organization. This prevents US companies and individuals from conducting business with the group.
Treasury officials also severed Huione Group from the American financial system. Authorities said the Cambodian company laundered proceeds from cryptocurrency scams. This action represents one of the harshest penalties available to US regulators.
Bitcoin Origins and Mystery
The seized Bitcoin came from LuBian, a mining operation based in China and Iran. LuBian ranked as the world’s sixth-largest crypto mining company before closing in 2020. Blockchain analytics firm Elliptic reported the assets disappeared that year.
Questions remain about how the Bitcoin entered US custody. It’s also unclear who removed the assets from LuBian or whether an actual theft occurred. Federal prosecutors allege Zhi controlled the mining operation.
Impact on Strategic Reserves
The forfeiture proceedings could transform America’s cryptocurrency holdings. President Donald Trump created national Bitcoin reserves through executive order in March. Current government holdings total approximately 198,000 Bitcoin worth over $22 billion.
Adding the Prince Group Bitcoin would increase reserves to roughly 325,000 BTC. At present values, this equals about $36 billion. The reserve accepts Bitcoin obtained through civil forfeiture and criminal prosecutions.
Treasury Secretary Scott Bessent noted that transnational fraud has eliminated billions from American victims. He said criminals wipe out life savings within minutes through these operations.
Prosecutors claim Zhi and his team spent fraud proceeds on luxury purchases. These included watches, yachts, private jets, vacation properties and fine art. One purchase allegedly involved a Picasso painting.
Bitcoin traded at $112,738 when authorities announced the seizure.
