Record $15 Billion Bitcoin Seizure: US DOJ Busts Alleged Global Fraud Ring Led by Chen Zhi
Washington D.C. – In a landmark case shaking the cryptocurrency world, the U.S. Department of Justice announced today the seizure of a staggering 127,271 Bitcoin – currently valued at approximately $15 billion – the largest cryptocurrency seizure in history. The target? Chen Zhi, president of Cambodia-based Prince Holding Group, accused of orchestrating a sprawling global network of online fraud, money laundering, and forced labor.
The “Pig Slaughter” Scheme and a Complex Web of Deceit
The alleged scheme, centered around a particularly insidious type of online fraud known as “pig slaughtering,” involved building fake relationships with victims online to gain their trust before luring them into investing in fraudulent cryptocurrency exchanges and wallets. According to DOJ records, Chen Zhi directly managed these operations, even maintaining a notebook detailing the scam targeting individuals in Vietnam, Russia, China, and Europe. The operation reportedly generated around $30 million per day in 2018, a chilling testament to its scale.
But the fraud didn’t stop at deception. The illicit profits were then funneled through a labyrinthine network of legitimate businesses, shell companies, and, crucially, large-scale Bitcoin mining operations. This wasn’t just about hiding money; it was about actively laundering it and creating a veneer of legitimacy.
From Cambodia to Laos to China: Tracing the Money Trail
The investigation revealed a complex international network. Prince Group, outwardly a real estate, financial services, and consumer group, allegedly served as a front for the fraudulent activities. Companies like Warp Data Technology (Laos) and Lubian (China) were instrumental in the laundering process, operating massive Bitcoin mining facilities. Lubian, at its peak, was the sixth-largest Bitcoin mining operation globally. Chen Zhi reportedly justified the operation’s profitability by claiming “low costs,” a thinly veiled reference to the stolen funds fueling the enterprise.
Luxury purchases – Rolex watches, Picasso paintings – were directly linked to the scheme, funded through shell companies like Hing Seng. Between November 2022 and March 2023, Warp Data alone received over $60 million from Hing Seng, highlighting the sheer volume of illicit funds flowing through the network.
Sophisticated Money Laundering Techniques & The Role of Crypto Exchanges
The operation didn’t rely on brute force alone. Chen Zhi and his associates employed sophisticated money laundering techniques, including the creation of shell companies (FTI, Amber Hill Ventures, LBG) and the use of U.S. bank accounts opened under false pretenses. Centralized cryptocurrency exchanges played a key role, with two platforms – dubbed “Exchange-1” and “Exchange-2” in court documents – facilitating the transfer of funds.
Exchange-1, based in China, was described as a haven for criminals due to its lack of cooperation with U.S. authorities. Funds were repeatedly split across dozens, even hundreds, of wallets, then pooled and mixed with newly mined Bitcoin to obscure their origin. The DOJ presented compelling evidence showing that Exchange-2 Bitcoin was intentionally transferred in patterns mimicking mining transactions, creating a false impression of legitimate activity.
How the FBI Secured the $15 Billion Bitcoin Stash
So, how did the FBI actually seize $15 billion in cryptocurrency? The key was tracing the funds back to Chen Zhi’s personal wallets. Agents identified the primary funding sources – Lubian and Warp Data’s mining operations, and indirect transfers from centralized exchange wallets through shell companies. They then grouped 25 of Chen’s wallets into 13 clusters based on transaction patterns, modeling the splitting and pooling of funds as a clear indicator of money laundering.
Crucially, the FBI determined that Chen Zhi personally controlled the private keys and seed phrases associated with these wallets. During the investigation, authorities were able to secure these critical pieces of information, allowing them to transfer the Bitcoin to addresses controlled by the U.S. government. The seized Bitcoin is no longer in Chen’s possession.
This case isn’t just about a massive financial crime; it’s a stark reminder of the evolving challenges law enforcement faces in the digital age. The use of cryptocurrency, while offering legitimate opportunities, also provides a fertile ground for illicit activities. The FBI’s success in this case demonstrates the growing sophistication of their investigative techniques and their commitment to combating financial crime in the digital realm. As cryptocurrency adoption continues to grow, expect to see even more focus on tracing and seizing illicit funds, and a continued push for greater regulation and transparency within the industry. Stay tuned to archyde.com for ongoing coverage of this developing story and the latest insights into the world of cryptocurrency and financial crime.
