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Introduction
The US government is moving to confiscate 127,271 Bitcoin worth approximately $14.2 billion linked to a massive cross-border ‘pig butchering’ scam operated by Chinese national Chen Zhi. The seized cryptocurrency is slated for addition to the US Strategic Bitcoin Reserve under a recent executive order. However, government shutdown complications and ratification deadlines could jeopardize the transfer.
Key Points
- Chen Zhi's Prince Group operated at least ten major scam compounds in Cambodia that doubled as detention sites for trafficked laborers forced to run crypto fraud schemes
- The criminal enterprise leveraged political corruption and bribery to obtain advance warnings of law enforcement raids, allowing them to maintain control of billions in illicit crypto flows
- US and UK authorities imposed coordinated sanctions on 146 individuals and entities while FinCEN used Section 311 powers to cut off Huione Group from the US financial system
The $14.2 Billion Bitcoin Seizure
The US Department of Treasury is pursuing one of the largest cryptocurrency seizures in history, targeting 127,271 Bitcoin valued at approximately $14.2 billion. According to court documents filed on October 14, these digital assets were generated through an elaborate transnational criminal operation led by Chinese national Chen Zhi. The legal action represents a significant escalation in the US government’s efforts to combat crypto-related financial crimes and marks a pivotal moment in the application of digital asset forfeiture laws.
The seizure is directly tied to Trump’s Executive Order issued earlier this year, which explicitly mandates that “The Strategic Bitcoin Reserve will be capitalized with bitcoin owned by the Department of Treasury that was forfeited as part of criminal or civil asset forfeiture proceedings.” This legal framework provides the foundation for transferring the confiscated Bitcoin into the nation’s official reserves, creating a new mechanism for converting illicit crypto assets into government holdings. However, the ongoing government shutdown and tight ratification deadlines present substantial procedural hurdles that could disrupt this planned transfer.
Inside the Pig Butchering Scam Operation
Chen Zhi’s criminal enterprise, operating under the banner of Prince Group, established a sophisticated network of scam compounds throughout Cambodia that blended cryptocurrency investment fraud with human trafficking and political corruption. Court records describe at least ten major facilities, including locations linked to the Jinbei Hotel and Casino, the Golden Fortune Science and Technology Park, and Mango Park. These compounds served dual purposes: as operational centers for running fraudulent crypto-investment schemes and as detention sites for trafficked laborers.
The operation employed the Chinese phrase “sha zhu,” translated as “pig butchering,” which refers to long-con scams that emotionally manipulate victims before systematically defrauding them. Thousands of migrants were reportedly lured by fake job advertisements and then forced to operate these fraudulent investment schemes under threat of violence. Chen personally maintained detailed ledgers documenting each site’s operations, providing investigators with crucial evidence of the scheme’s scale and methodology.
According to the court filing, Chen and senior executives leveraged bribery and political influence to evade prosecution, even obtaining advance warnings of planned law enforcement raids. This corruption network enabled the group to maintain control of billions in illicit cryptocurrency flows and entrench its position within Cambodia’s broader shadow economy, creating a persistent criminal infrastructure that spanned international borders.
Coordinated International Sanctions and Financial Isolation
Beyond the Bitcoin seizure, US authorities acting in coordination with the United Kingdom’s Foreign, Commonwealth, and Development Office imposed comprehensive sanctions targeting Chen Zhi and his criminal network. The Office of Foreign Assets Control sanctioned 146 individuals and entities tied to the Prince Group Transnational Criminal Organization, representing one of the most extensive sanctioning actions against a crypto-based criminal enterprise.
Simultaneously, the Financial Crimes Enforcement Network invoked Section 311 of the USA PATRIOT Act to formally isolate Cambodia’s Huione Group from the US financial system. US officials identified Huione as a primary conduit for laundering proceeds from crypto fraud and related cybercrime, with its networks instrumental in concealing billions in stolen funds from investors worldwide. This financial isolation represents a strategic effort to dismantle the infrastructure supporting large-scale crypto crime operations.
The coordinated actions by OFAC, FinCEN, and UK authorities demonstrate an increasingly sophisticated international approach to combating crypto-enabled financial crime. By targeting both the individuals responsible and the financial networks that facilitate their operations, law enforcement agencies are developing new methodologies for addressing the transnational nature of cryptocurrency-based criminal enterprises.
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