Cracking down on China's pig-butchering scams! The United States seizes 14.2 billion Bitcoin for strategic reserves.

The U.S. government, in conjunction with the United Kingdom, dismantled a cross-border fraud empire led by Chinese citizen Chen Zhi, seizing 127,271 Bitcoins valued at $14.2 billion. The assets seized from the Chinese Bitcoin fraud case will be incorporated into the U.S. strategic Bitcoin reserve under Trump's executive order, marking a historic combination of digital asset enforcement and national strategic reserves.

The largest cryptocurrency fraud case in history has been cracked

(Source: U.S. Department of Justice)

The legal documents submitted by the U.S. Department of Justice on October 14 revealed a shocking transnational crime network. Chinese citizen Chen Zhi, through his operated Prince Group, established a vast underground empire in Cambodia that integrates cryptocurrency investment fraud, human trafficking, and political corruption. The U.S. government is taking action to seize approximately $14.2 billion worth of 127,271 Bitcoins, which have been identified as illegally obtained through a meticulously planned cross-border "pig slaughter" scam.

The scale of this Bitcoin fraud case in China is unprecedented. Investigations show that the Prince Group operates at least ten large parks in Cambodia, including facilities such as the Jinbei Hotel and Casino, the Jin Wealth Technology Park, and Mango Park. These seemingly normal business locations are, in fact, hubs for scams and detention centers for trafficked laborers. Thousands of immigrants have been lured to Cambodia by false job advertisements and subsequently forced to participate in fraudulent cryptocurrency investment schemes under threats of violence.

Court records show that Chen Zhi personally kept detailed ledgers documenting the operation status of each website. These internal documents repeatedly featured the Chinese phrase "殺豬盤", which specifically refers to a long-term scam tactic in the fraud community: first manipulating the victim's emotions to build trust, then enticing them to invest significant amounts of money in fake cryptocurrency investments, and finally harvesting all their assets in one go. The cruelty of this method lies in the fact that scammers often spend weeks or even months cultivating emotions, only revealing their true intentions after the victims have completely let down their guard.

Operation Model of the Prince Group's Criminal Empire

The operation model of the Prince Group demonstrates how criminal organizations exploit the anonymity of blockchain technology to cover up their illegal activities. According to court documents, Chen Zhi's group is not merely a simple fraud organization, but a highly organized transnational criminal organization (TCO) that plays a central role in Cambodia's underground digital economy. The group controls billions of dollars in illegal cryptocurrency flows and evades prosecution through bribery and political influence.

Even more shocking is that Chen Zhi was even able to receive advance warnings about planned raids by Cambodian law enforcement. This depth of political infiltration has allowed the prince group to remain at large for a long time, with its criminal network continuing to expand. The U.S. government accuses Chen Zhi and his senior executives of leveraging these political connections to solidify their dominant position in Cambodia's broader shadow economy. This vast criminal network not only targets victims in Asia but also extends its claws towards U.S. citizens and others from allied nations, carrying out hundreds of online investment frauds.

Role of Huione Group in Money Laundering Channel

In this Chinese Bitcoin scam network, the Huione Group plays a key role in money laundering. The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has imposed sanctions on 146 individuals and entities linked to the Prince Group's transnational criminal organization. The Financial Crimes Enforcement Network (FinCEN) further invoked Section 311 of the USA PATRIOT Act to formally isolate the Cambodian Huione Group from the U.S. financial system, identifying it as a primary conduit for money laundering cryptocurrency scams and related cybercrime proceeds.

U.S. officials stated that Huione's network played a significant role in concealing billions of dollars of stolen funds from global investors. This complex money laundering network utilized the cross-border transfer convenience of cryptocurrencies to quickly move and obscure the source of fraudulent proceeds. Through multilayer transactions and cross-chain conversions, Huione helped the Prince Group convert illicit funds into seemingly legitimate assets. This specialized money laundering service not only served the Prince Group but also provided the infrastructure for financial flows in the entire underground economy of Cambodia.

Historic Expansion of US Strategic Bitcoin Reserves

Once the seizure process is complete, this batch of Bitcoin worth $14.2 billion will be added to the U.S. strategic Bitcoin reserves in accordance with the executive order issued by Trump earlier this year. This executive order clearly states: "The strategic Bitcoin reserves will be capitalized with Bitcoin seized by the Treasury in criminal or civil asset forfeiture proceedings." This means that the assets seized from the Chinese Bitcoin fraud case will be directly converted into national-level digital asset reserves for the United States.

This decision marks a significant shift in the U.S. government's attitude towards Bitcoin. In the past, cryptocurrencies seized by law enforcement were typically sold through auctions, with the proceeds going to the national treasury. Now, the establishment of a strategic Bitcoin reserve in the U.S. indicates that the federal government is beginning to view Bitcoin as an asset of long-term strategic value, similar to gold reserves or foreign exchange reserves. The quantity of 127,271 Bitcoins is considerable, and if calculated at current market prices, it would make the U.S. one of the sovereign nations with the largest holdings of Bitcoin in the world.

However, the execution of this plan is not without obstacles. Due to the risk of a government shutdown and the tight approval timeline, the lack of a formal policy framework may disrupt the original plan. How to manage this vast amount of digital assets, whether Congressional approval is needed, and how to assess its potential impact on the market are all complex issues that need to be addressed. Including $14.2 billion worth of Bitcoin in the national reserves at once could significantly impact market supply and demand, and policymakers must handle this with caution.

International Cooperation to Combat Cross-Border Cryptocurrency Crimes

This case also demonstrates the importance of international law enforcement cooperation. The U.S. government, in conjunction with the U.K. Foreign, Commonwealth & Development Office (FCDO), took joint action to impose sanctions against Chen Zhi and his related entities. This transnational collaboration is crucial in combating criminal activities that exploit blockchain technology for cross-border asset transfers. The borderless nature of cryptocurrencies makes traditional single-nation law enforcement efforts limited in effectiveness; only through international cooperation can illegal fund flows be effectively tracked and frozen.

The participation of the UK is particularly noteworthy. As one of the global financial centers, London holds a significant position in cryptocurrency trading and regulatory compliance. The cooperation between the UK and the US can not only sever the funding channels of the Prince Group within the Western financial system but also send a clear signal to global criminal organizations: engaging in cross-border fraud using cryptocurrency will face joint sanctions from the international community.

The resolution of this Bitcoin fraud case in China is a delayed justice for the victims. Although the legal process may still take months or even years to fully conclude, the decisive actions of the U.S. government have already frozen the main assets of the criminal organization. For those victims who lost their life savings in the "pig-butchering" scam, whether their assets can be recovered remains uncertain, but at least there is hope of seeing the criminals brought to justice.

From a more macro perspective, this case highlights the necessity and complexity of cryptocurrency regulation. Blockchain technology itself is a neutral tool that can be used for innovative financial services, but it may also be abused by criminal organizations. The establishment of the United States' strategic Bitcoin reserves, along with a severe crackdown on cross-border crypto crime, demonstrates a balanced regulatory approach: combating crime while also recognizing the strategic value of digital assets.