Additional Coverage:
- Feds seize $15 billion in crypto from ‘pig butchering’ scheme involving forced labor camps (cnn.com)
Feds Seize Staggering $15 Billion in Crypto from “Pig Butchering” Scheme, Linked to Forced Labor Camps
Washington D.C. – In a historic move, federal prosecutors have announced the seizure of an unprecedented $15 billion in cryptocurrency, believed to be the proceeds of an elaborate investment scam known as “pig butchering.” The Justice Department alleges this massive scheme originated from forced labor camps in Cambodia, marking the largest forfeiture action in its history.
The unsealed indictment Tuesday charges Chen Zhi, a Chinese émigré and founder of Cambodia’s influential Prince Group, with money laundering conspiracy and wire fraud conspiracy. Chen Zhi, who holds multiple passports, remains at large.
In a parallel action, the Treasury Department has sanctioned numerous affiliates of the Prince Group, designating them as criminal organizations. This crackdown comes amidst a significant rise in “pig butchering” scams, which have collectively cost Americans millions of dollars. The term refers to the deceptive practice of building rapport with victims (“fattening them up”) before ultimately defrauding them of their investments (“slaughter”).
Prosecutors contend that Chen transformed the Prince Group into one of Asia’s most formidable transnational criminal enterprises. Authorities allege that stolen funds were used to acquire luxury assets, including yachts, private jets, and even a Picasso painting purchased through a New York auction house. The seized assets include 127,271 Bitcoin, currently valued at approximately $15 billion, now in U.S. custody.
Christopher Raia, Assistant Director in Charge of the FBI’s New York field office, described this as one of the largest “pig butchering” schemes ever investigated. While acknowledging the widespread nature of these scams, Raia emphasized the FBI’s strategy of targeting the most significant cases to dismantle the underlying criminal networks.
“It’s kind of like jaywalking,” Raia told CNN, explaining that authorities cannot simply arrest their way out of the problem. Instead, the focus is on “cut[ting] off the head of the snake.”
The investigation reportedly began in 2022 when the FBI was probing a money laundering network in Brooklyn, New York, which ultimately led them to the vast operations of the Prince Group.
Forced Labor and Deceptive Tactics
According to the indictment, Chen and his co-conspirators allegedly operated at least ten forced labor camps in Cambodia since 2015. These facilities were reportedly used to conduct cryptocurrency investment schemes and other fraudulent activities. The indictment further alleges that criminal proceeds were laundered through the Prince Group’s businesses, and bribes were paid to government officials to evade criminal investigations.
The forced labor camps, described as being enclosed by high walls and barbed wire, were transformed into “phone farms” – automated call centers – to execute the elaborate cryptocurrency scheme. Two such facilities were reportedly equipped with 1,250 mobile phones controlling 76,000 social media accounts.
The scam typically involved perpetrators contacting individuals via messaging apps and social media, often initiating contact by feigning a wrong number. Workers were reportedly instructed to cultivate rapport with potential victims, even being advised to use profile photos of women who were “not ‘too beautiful’ so the accounts would appear genuine,” as stated in the indictment.
After weeks of building trust, victims would be invited to participate in an investment opportunity and encouraged to transfer funds through virtual currencies. In some instances, the perpetrators allegedly fabricated emergencies or engaged in romance scams to solicit money.
Once funds were transferred, authorities allege, the scammers would present victims with fabricated profits to entice further investment. Ultimately, once the money was stolen, all contact would be severed.
The indictment claims that in 2018, one of Chen’s co-conspirators boasted that the Prince Group was earning over $30 million a day from these fraudulent schemes. Physical violence was allegedly employed at the camps to maintain control over the laborers.
Authorities also allege that Chen and his co-conspirators bribed public officials in China and other locations to avoid investigations and raids on the forced labor compounds. Chen reportedly maintained ledgers of these bribes, with one entry detailing the purchase of a $3 million yacht for a senior foreign government official in 2019.
This $15 billion crypto seizure significantly surpasses a previous record of $225 million announced by the Justice Department in June. Law enforcement officials are intensifying efforts to warn Americans about the devastating impact of crypto-investment scams, which have been linked to individuals losing all their life savings and, in tragic cases, even taking their own lives.
A substantial portion of crypto scams are believed to be orchestrated by networks of scammers in Southeast Asia, with some schemes traced to large compounds along the Myanmar-Thailand border.
Raia urges anyone who suspects they have been a victim of such a scam to contact the FBI. He stressed the importance of extreme caution before entrusting money to individuals encountered online. “It’s just not a good decision, especially in this day and age with social media and everybody on the Internet portraying themselves to be somebody they’re not,” he concluded.