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Credit: U.S. Department of Justice
Details of the U.S. Department of Justice’s largest-ever cryptocurrency confiscation have emerged after an indictment was unsealed in a federal court in Brooklyn, New York, on Tuesday. You’ve seen the headline, and there’s a lot to take in, but the essence of the indictment is that the alleged scammer, Chen Zhi, is accused of hoarding $15 billion in Bitcoin, raked in from a sophisticated ‘pig butchering’ operation run out of Cambodia. Moreover, Zhi is said to have run much of his lucrative fraud and money laundering business using trafficked forced labor.
‘Pig butchering’ scams are characterized by con artists emotionally manipulating victims into investing in fake schemes. It is a ‘long con,’ as there is a period of building trust and delivering small or false gains before the victims are financially ‘slaughtered.’ At this point, the con artist takes a large payoff – often severely or completely draining their victim’s funds.
Prince Group was an unprincely organization
Chen Zhi, a UK and Cambodian national, is the founder and chairman of a multinational business conglomerate called Prince Group. This 37-year-old has now been formally charged “with wire fraud conspiracy and money laundering conspiracy for directing Prince Group’s operation of forced-labor scam compounds across Cambodia,” says the DoJ press release.
Prince Group was set up ostensibly as a real estate development, financial services, and consumer services business back in 2015. However, this seems to have evolved into a cover operation for “one of Asia’s largest transnational criminal organizations,” according to the FBI. Such was its success that the firm was enjoying “enormous profits,” top execs enjoyed lavish lifestyles, and Prince Group controlled business entities in over 30 countries.
127,271 BTC seized
A total of 127,271 bitcoin in Zhi’s possession was seized by the DoJ, which characterizes the funds as ill-gotten gains. Specifically, the accused is said to have collected this hoard by fraud and money laundering.
“Today the FBI and partners executed one of the largest financial fraud takedowns in history,” said FBI Director Kash Patel. “This is an individual who allegedly operated a vast criminal network across multiple continents involving forced labor, money laundering, investment schemes, and stolen assets — targeting millions of innocent victims in the process. Justice will be done and I’m proud of the men and women of the FBI who executed the mission faithfully.”
Vertically integrated crime
It is rare to see such a strongly vertically integrated criminal venture exposed. Investigations indicate that victims at one end of the operation were defrauded out of millions of dollars. That’s just for Prince Group’s Brooklyn office, which apparently transferred and laundered funds from over 250 victims.
At the other end of the operation, hundreds of workers were trafficked and forced to work in compounds in Cambodia and execute the scams, often under the threat of violence, says the DoJ’s press release.
Meanwhile, between these two extremes, Prince Group execs would be busy using “spraying” and “funneling” techniques to obfuscate flows of funds.
Zhi awaits trial, but Prince Group has already been dethroned
If convicted, Zhi could face up to 40 years in prison. However, Prince Group’s fate seems to have already been decided. On Tuesday, the firm was designated as “a transnational criminal organization” by U.S. and UK authorities. If you know anything about, or have had dealings with Zhi, or Prince Group, the FBI have opened up a tips line at PrinceGroupTips@fbi.gov.
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