Federal authorities have seized about $15 billion worth of bitcoin in alleged fraud and money laundering schemes that used trafficked workers in Southeast Asia to defraud victims in the United States and around the world, prosecutors announced Oct. 14.
In an indictment unsealed on Oct. 14, federal prosecutors accused Chen “Vincent” Zhi, 37, of operating “industrial-scale” cryptocurrency scams that involved forced-labor compounds across Cambodia. Prosecutors alleged that workers were held against their will in these compounds and were forced to participate in cryptocurrency investment fraud schemes, known as “pig butchering” scams.
Zhi, the alleged founder and chairman of Prince Holding Group, has been charged with wire fraud conspiracy and money laundering conspiracy. Prosecutors alleged that Zhi secretly grew the Prince Group, a multinational business conglomerate based in Cambodia, into “one of Asia’s largest transnational criminal organizations.”
The U.S. Department of the Treasury has designated the Prince Group as a transnational criminal organization, and, along with the United Kingdom, sanctioned the group and associated entities, according to prosecutors.
Prosecutors said the U.S. Department of Justice seized around 127,271 bitcoin — or $15 billion, according to the DOJ — in funds traceable from the crimes. They were now seeking court approval to take permanent custody of the bitcoin, in what prosecutors called the “largest ever forfeiture action” in the Department of Justice’s history.
“As alleged, the defendant was the mastermind behind a sprawling cyber-fraud empire operating under the Prince Group umbrella, a criminal enterprise built on human suffering,” John Eisenberg, assistant attorney general for the National Security Division, said in a statement. “Trafficked workers were confined in prison-like compounds and forced to carry out online scams on an industrial scale, preying on thousands worldwide, including many here in the United States.”
Prosecutors said Zhi remains at large but is believed to be in Cambodia. If convicted, he faces a maximum penalty of 40 years in prison.
Zhi has been the founder and chairman of the Prince Group since around 2015, according to the indictment. The Prince Group, which operates dozens of business entities in more than 30 countries, “ostensibly focused on real estate development, financial services, and consumer services.”
But under Zhi’s direction, prosecutors said the Prince Group made “enormous profits operating scam compounds across Cambodia that perpetrated fraudulent cryptocurrency investment schemes.”
Prosecutors alleged that the Prince Group trafficked hundreds of workers. The compounds used fake job adverts to lure workers who were then forced to commit online fraud under threat of torture and violence, according to prosecutors.
The compounds consisted of “vast dormitories surrounded by high walls and barbed wire, and functioned as violent forced labor camps,” prosecutors said. Prosecutors accused Zhi of directly managing the compounds by maintaining records, including ledgers tracking profits and which schemes were operating from each room.
Prosecutors said schemes included luring victims into fake romantic relationships before persuading them to invest large sums into fraudulent cryptocurrency platforms.
“The scam perpetrators often built relationships with their victims over time, earning their trust before stealing their funds,” prosecutors said, adding that victims around the world were targeted with the help from local networks working on Prince Group’s behalf.
One network operated in Brooklyn, New York, and facilitated the laundering of millions of dollars on behalf of Prince Group from more than 250 victims across the country, prosecutors said.
Prosecutors said Zhi and his associates used some of the funds from the schemes for luxury travel and entertainment. They also used the proceeds to buy watches, yachts, private jets, vacation homes, high-end collectables, and rare artwork, including a Picasso painting purchased through an auction house in New York City.
Zhi and other top executives at the Prince Group were also accused of using their political influence in multiple countries to “protect their criminal enterprise and paid bribes to public officials to avoid disruption by law enforcement,” according to prosecutors.
Prosecutors alleged that Zhi and his associates laundered the funds through online gambling and cryptocurrency mining companies. The funds were previously stored in cryptocurrency wallets owned by Zhi, according to prosecutors.
Under Zhi’s direction, Prince Group associates allegedly used “sophisticated cryptocurrency laundering techniques to obscure” the source of fraudulent profits, prosecutors said. These techniques included “spraying” and “funneling,” in which large volumes of cryptocurrency were separated across numerous virtual currency addresses and then re-consolidated into fewer addresses.
Contributing: Reuters
