U.S. authorities are seeking the forfeiture of a record US$15 billion worth of crypto amid charges against the head of a Cambodian conglomerate, alleging that the company operated sweatshops carrying out crypto scams.
According to an indictment that was unsealed in a federal court in New York Tuesday, the chairman of Prince Holding Group, Chen Zhi, was charged with wire fraud conspiracy and money laundering conspiracy, in connection with allegations that the company ran forced labour camps that engaged in crypto investment scams that took billions from investors around the world.
U.S. authorities alleged that the perpetrators of these schemes, known as “pig butchering” scams, contacted investors through social media and messaging apps and convinced them to invest their crypto in various ventures.
“In reality, the funds were stolen from the victims and laundered for the benefit of the perpetrators,” U.S. authorities alleged, adding that the scammers often “built relationships with their victims over time, earning their trust before stealing their funds.”
These scams were allegedly carried out by hundreds of workers that were trafficked and housed in compounds that “functioned as violent forced labour camps,” U.S authorities also alleged.
At the same time, the U.S. Attorney’s Office for the Eastern District of New York and the U.S. Department of Justice (DoJ) filed a civil forfeiture complaint against approximately 127,271 bitcoin — currently worth approximately US$15 billion — that, they allege, represent the proceeds of the fraud and money laundering schemes.
“Prince Group associates used sophisticated cryptocurrency laundering techniques to obscure the source of fraudulent Prince Group profits, including ‘spraying’ and ‘funneling’ techniques in which large volumes of cryptocurrency were repeatedly disaggregated across scores of virtual currency addresses and then re-consolidated into fewer addresses to obscure the source of the funds,” U.S. authorities alleged.
The proceeds were ultimately held at crypto exchanges, or converted into fiat currency and stored in traditional bank accounts — and they were also used as operating capital for the crypto mining businesses, they also said.
While the crypto is already in the custody of the U.S. government, Zhi remains at large. The allegations against him haven’t been proven, and he is presumed to be innocent.
“As alleged, the defendant directed one of the largest investment fraud operations in history, fueling an illicit industry that is reaching epidemic proportions,” said Joseph Nocella Jr., U.S. attorney for the EDNY, in a release.