The cryptocurrency world was rocked recently when the US Department of Justice (DOJ) charged Chen Zhi, president of Cambodia-based Prince Holding Group, with running a global network of online fraud, money laundering and forced labor operations.
The most notable detail of the case is the seizure of 127,271 BTC, currently valued at around $15 billion – the largest cryptocurrency seizure in history.
“This is the largest seizure of virtual assets in history” the Justice Department said, noting that Bitcoin originated from fraudulent schemes such as “pig slaughter” scams, laundered through a complex network of shell companies and large-scale Bitcoin mining operations.
Fraud tactics and suspicious activity
Chen Zhi, who holds multiple citizenships including Chinese, Cambodian, Cypriot and Vanuatuan, publicly headed a conglomerate with interests in real estate, finance and consumer services. Behind the scenes, the most profitable operation involved defrauding victims and using forced labor in Cambodia.
Much of the fraud centers on “pig slaughter” scams, in which criminals cultivate online trust to lure victims into fake exchanges and wallets. Justice Department documents reveal that Chen Zhi directly ran these operations, maintaining scripts that targeted victims in Vietnam, Russia, China, Europe and elsewhere.
In 2018, Prince Group’s illicit activities reportedly generated $30 million per day, the proceeds of which were laundered through a network designed to conceal their origin. The funds have also supported large-scale cryptocurrency mining via companies such as Warp Data Technology (Laos) and Lubian (China). At a certain point, Ljubljana ranked as the sixth largest Bitcoin mining operation in the world.
Sophisticated money laundering techniques
Chen Zhi and his accomplices used multi-layered money laundering strategies to obscure the origin of the funds. The newly mined Bitcoins were mixed with the scam proceeds and routed through multiple wallets, including non-custodial wallets controlled by Chen Zhi himself. Shell companies such as FTI, Amber Hill Ventures and LBG opened bank accounts in the United States under false pretenses to facilitate the transfers.
Transactions were split among dozens, sometimes hundreds, of wallets before being consolidated into key addresses. The FBI tracked these flows, identifying patterns in which funds from mining and illicit sources were intentionally mixed to simulate legitimate mining revenue.
“The use of similar transaction amounts and timing indicate deliberate efforts to disguise the illicit origin of the funds,” the FBI noted.
How the FBI Protected Bitcoin
The seized Bitcoins were stored in Chen Zhi’s personal wallets, not on exchanges. Investigators mapped 25 personal addresses, grouping them into 13 clusters based on transaction times and amounts. Using internal evidence and Chen Zhi’s records of private keys and seed phrases, the FBI was able to seize the funds and store them in government-controlled addresses.
This seizure highlights the risks associated with virtual currencies such as Bitcoin and Pi, which, while offering profitable investment opportunities, are also susceptible to criminal abuse.
Sources: US Department of Justice (DOJ) documents, FBI reports, cryptocurrency media outlets
