Largest bitcoin seizure leaves Asian scam network victims in limbo
After the US Department of Justice (DOJ) seized billions worth of bitcoin (BTC) from a suspected mastermind of an Asian scam network, the question now lingers over whether its victims will be compensated.
The US Attorney’s Office for the Eastern District of New York and the DOJ’s National Security Division said it has filed the largest forfeiture complaint in the department's history. The action was taken against approximately 127,271 BTC (worth around $14 billion) confiscated from Chen Zhi, also known as "Vincent."
The founder and chairman of Prince Holding Group (Prince Group), a multinational business conglomerate based in Cambodia, was also charged with wire fraud conspiracy and money laundering conspiracy for directing Prince Group’s operation of forced-labor scam compounds across Cambodia.
"Individuals held against their will in the compounds engaged in cryptocurrency investment fraud schemes, known as 'pig butchering' scams, that stole billions of dollars from victims in the United States and around the world. The defendant is at large," the attorneys said.
Meanwhile, according to them, the seized BTC was previously stored in wallets whose private keys Chen Zhi had in his possession, but those funds are now in the custody of the US government. The attorneys did not specify how they managed to access the wallets.
Blockchain analysis company Chainalysis also said that Chen Zhi’s wallets received extensive inflows indirectly from a Bitcoin mining pool operated by the same Prince Group.
In either case, the question now is what will happen to the seized funds and whether victims can be compensated.
"Bitcoins were stolen from victims worldwide, conned by professional scammers. Miraculously, the coins are found and can now be returned to victims, many of whom I’m sure had their lives ruined," founder of bitcoin company Bull Bitcoin, Francis Pouliot, said, criticizing those urging the US government to leave the seized BTC in the Strategic Bitcoin Reserve (SBR) of the US.
However, Zack Shapiro, a lawyer and Head of Policy at the Bitcoin Policy Institute, stressed that this seizure is "exactly the kind of outcome the Strategic Bitcoin Reserve was designed to enable."
"Under Section 3(d) of the SBR Executive Order, any coins that can be traced to identifiable victims must first be returned to them. But for the remainder, which would otherwise sit idle or be liquidated, the SBR ensures that bitcoin recovered from atrocities like pig-butchering is preserved as a strategic national asset," Shapiro said, separately noting that restitution claims are usually paid out in USD, while much of the stolen funds were reportedly in the form of stablecoins and not BTC.
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