Alleged Crypto Scam Kingpin Arrested in Cambodia After $12 Billion Bitcoin Seizure

In brief

• Chen Zhi, the alleged mastermind of a “pig butchering” crypto fraud ring, was arrested in Cambodia.
• Zhi was indicted by the U.S. Department of Justice in October and charged with wire fraud and money laundering conspiracy.
• His crypto fraud network allegedly stole billions from users globally, with nearly $12 billion in Bitcoin from the operations now held by the U.S. government.

The alleged mastermind of a scam ring that stole billions of dollars’ worth of assets from individuals in the U.S. and across the globe was arrested Tuesday in Cambodia and extradited to China, according to a Wall Street Journal report.  Chen Zhi, a Cambodian national and the founder and chairman of Prince Holding Group, was charged in October with wire fraud conspiracy and money laundering conspiracy for his role in the operation of scam compounds that stole billions from victims.  As part of the scheme, Zhi’s conglomerate held individuals against their will at compounds and forced them to run crypto fraud schemes, sometimes referred to as “pig butchering” scams, in which they built relationships with unsuspecting users before stealing their funds. These scams get their name from the process of fattening a pig before it is slaughtered. 

Zhi’s scam network grew its stolen proceeds to more than 127,271 Bitcoin valued around $11.6 billion at today’s Bitcoin prices. Those funds, currently in the custody of the U.S. government, are being sought by the Department of Justice as part of the largest civil seizure and forfeiture action in the department’s history. Alongside the October indictment, the Department of Justice designated Prince Group as a transnational criminal organization and sanctioned Zhi and other associated individuals.  The indictment detailed that Zhi’s group trafficked hundreds of workers to multiple compounds in Cambodia to run its fraud network. He directly managed the compounds and kept detailed records on each while also guiding associates to use crypto to help obscure the group’s profits. Some of the proceeds were ultimately used by Zhi and his associates for luxury travel and extravagant purchases, including a Pablo Picasso painting.

While Zhi’s scams accounted for nearly $12 billion in seized funds related to illicit activities, a report from Chainalysis indicates that on-chain crypto balances related to criminal activity exceeds $75 billion.  Illicit entities held nearly $15 billion in funds on their own last July—a more than 300% gain since 2020—the bulk of which come from stolen funds, according to the report.