15 billion USD BTC changes hands: US Department of Justice eradicates Cambodian prince group, transforming into the world's largest BTC whale

Author: Ethan; Editor: Qin Xiaofeng
Produced by | Odaily Planet Daily

A lawsuit from the U.S. District Court for the Eastern District of New York has stirred up a storm in the crypto world.

On October 14, the U.S. Department of Justice announced criminal charges against Chen Zhi, the founder of the Prince Group in Cambodia, and applied to confiscate 127,271 BTC under his control, valued at approximately $15 billion, making it the largest judicial confiscation of Bitcoin in the world.

"The most significant virtual asset confiscation action in history." The Department of Justice used highly cautionary language in its announcement. Furthermore, officials emphasized that this batch of BTC was not stored on a trading platform but was long held by Chen himself through an unhosted private wallet. This seems to shake the core tenet of the crypto community: "If you hold the private key, your assets are unseizable."

In fact, even without cracking encryption algorithms, the U.S. government can still complete a "judicial transfer" of assets through legal procedures. Through on-chain tracking and international cooperation, law enforcement agencies identified Bitcoin scattered across multiple addresses, all controlled by Chen. The court subsequently issued a seizure order, legally transferring these assets to an address controlled by the U.S. government, entering the judicial custody process, awaiting a final civil forfeiture judgment.

Meanwhile, the U.S. Treasury Department's Office of Foreign Assets Control has designated the "Prince Group" as a transnational criminal organization and imposed sanctions on 146 related individuals and entities; the Financial Crimes Enforcement Network has classified Huione Group as a "primary money laundering concern" under the Patriot Act, prohibiting it from accessing the U.S. dollar clearing system. The UK has also simultaneously imposed asset freezes and travel bans on Chen and his family members.

In the context of the crypto market, this moment is highly symbolic. It is not only law enforcement against a criminal group but also a public demonstration of a national agency exercising direct control over on-chain assets. The number 127,271 BTC—capable of changing market sentiment and regulatory direction—has been inscribed in the history of Bitcoin regulation, becoming a key marker.

From Fujian Merchant to Fraud Empire: Chen Zhi's Capital Layout and Industrial Crimes

The indictment from the U.S. Department of Justice reveals another face of Chen Zhi and his Prince Group.

In reports from Southeast Asian media, Chen Zhi was once a "new noble of Cambodia," and the Prince Group he controlled was promoted as a multinational conglomerate with businesses spanning real estate, finance, and more. However, the DOJ alleges that behind this facade lies a "dual operating logic": externally, a legitimate business empire; internally, a funding control and clearing system serving fraudulent profits.

Chen Zhi, originally from Fujian, made his fortune in Cambodia through the gambling and real estate industries. After obtaining Cambodian citizenship in 2014, he quickly acquired multiple development permits and financial licenses through political and business connections. He did not stop at local operations but instead built a complex multinational asset allocation through establishing companies in the British Virgin Islands and a holding structure in Singapore, and is suspected of holding British identity, thereby creating barriers between different jurisdictions. In April 2024, the King of Cambodia even issued a royal decree appointing Chen Zhi as an advisor to Prime Minister Hun Sen of the Senate, demonstrating his deep political and business roots in the region.

King Norodom Sihamoni of Cambodia issued a royal decree on April 19, 2024, appointing Duke Chen Zhi, chairman of the Prince Group, as an advisor to Prince Hun Sen of the Cambodian Senate.

According to the allegations, the telecommunications fraud system established by Chen Zhi in Cambodia operates in a "industrialized" manner. The DOJ documents frequently mention the concepts of "parks" and "phone farms," with a highly systematic operational model:

• Physical Base: The so-called "parks" are registered under the guise of outsourcing services but are actually managed in a closed manner.
• Labor Control: Foreign workers are often lured into the country with "high salaries" and then face restrictions on their personal freedom.
• Standardized Operations: Operators manage hundreds of "relationship lines," using a unified script for social inducement and investment guidance, with processes similar to customer relationship management.
• Technical Camouflage: "Phone farms" utilize a large number of SIM cards and IP proxies to create virtual identities and geographic locations, concealing the true source.

This is not a traditional disorganized fraud gang but a clearly defined "on-chain fraud factory." All fraudulent funds ultimately flow into the financial intermediary layer of the Prince Group. Reports indicate that Chen Zhi's criminal proceeds were used for extremely luxurious consumption, including purchasing luxury watches, yachts, private jets, and even a Picasso painting auctioned in New York.

Overview of the two-tier business structure of the Prince Group.

Funding Source: From Hacker Plunder to Fraud Laundering

The origin of the 127,271 BTC in this case is particularly complex. According to reports from on-chain analysis firms like Elliptic and Arkham Intelligence, this batch of Bitcoin is highly correlated with a large-scale theft incident from a mining company called "LuBian" in 2020.

Records show that in December 2020, an abnormal transfer occurred in LuBian's core wallet, with approximately 127,426 BTC stolen. On-chain, there was even a small transaction with a message sent from LuBian to the hacker's address: "Please return our funds, we'll pay a reward." After that, this massive amount of funds remained dormant for a long time, only becoming active in mid-2024, with its movement path overlapping with the wallet cluster controlled by the Prince Group. *(Latest update: On October 15, * all 9,757 BTC related to LuBian were transferred after three years of dormancy, valued at $1.1 billion (https://www.odaily.news/zh-CN/newsflash/452472).)*

This indicates that the investigation revealed not a simple "fraud-laundering" chain but a more complex path: "Hacker plunder of mining sites → Long-term lurking → Inclusion into the funding pool by criminal organizations → Attempt to launder through mining and over-the-counter trading." This finding elevates the case to a new level of complexity: it involves hacking attacks and mining security vulnerabilities, and reveals how gray exchange networks absorb and conceal unusually sourced massive funds.

How Was the Bitcoin Seized?

For the cryptocurrency industry, the far-reaching impact of this case goes beyond taking down a fraud kingpin; it lies in the complete demonstration by judicial and intelligence agencies of a disposal process for on-chain assets: on-chain localization → financial blockade → judicial takeover. This is a practical closed loop that seamlessly connects "on-chain tracking capabilities" with "traditional judicial power."

Step 1: On-Chain Tracking—Locking Down the "Funding Containers"

The anonymity of Bitcoin is often misunderstood. In fact, its blockchain is a public ledger, with every transaction leaving a trace. The Chen Zhi Group attempted to launder money using the classic "spray-funnel" model: dispersing funds from the main wallet to a vast number of intermediate addresses like a watering can, and after a brief stay, re-aggregating into at least a few core addresses like streams converging into a river.

This operation seems complex, but from the perspective of on-chain analysis, frequent "dispersal-aggregation" actions actually create unique pattern characteristics. Investigative agencies (such as TRM Labs and Chainalysis) use clustering algorithms to accurately map out the "funds backflow map," ultimately confirming that these seemingly dispersed addresses all point to the same controlling entity—the Prince Group.

Step 2: Financial Sanctions—Cutting Off the "Monetization Channels"

After locking down the on-chain assets, U.S. authorities initiated dual financial sanctions:

• Treasury Department (OFAC) sanctions: Listing Chen Zhi and related entities, prohibiting any U.S.-jurisdictional institutions from trading with them.
• Financial Crimes Enforcement Network (FinCEN) §311: Designating key entities as "primary money laundering concerns," completely cutting off their access to the U.S. dollar clearing system.

At this point, although these Bitcoins can still be controlled by private keys on-chain, their most important value attribute—"the ability to be exchanged for U.S. dollars"—has been frozen.

Step 3: Judicial Takeover—Completing the "Ownership Transfer"

The final confiscation does not rely on violently cracking private keys but rather directly takes over the "signing rights" through legal procedures. Law enforcement officials, based on search warrants, obtain mnemonic phrases, hardware wallets, or trading permissions, and then initiate a legal transfer transaction to move the Bitcoin into a government-controlled custody address, just like the original owner would.

When this transaction is confirmed by the blockchain network, "legal ownership" and "on-chain control" are unified. The ownership of these 127,271 BTC has officially transferred from Chen Zhi to the U.S. government in both technical and legal terms. This series of actions clearly indicates: in the face of national power, "on-chain assets are unseizable" is not absolute.

Where Will the Bitcoin Go After Seizure?

When 127,271 BTC is transferred from the fraud empire's wallet to the "U.S. Government Controlled Wallet," a more strategically significant question arises: the ultimate destination of this massive asset will reveal how the U.S. government positions Bitcoin—whether as urgently needed "ill-gotten gains" or as a "strategic asset" to be acquired.

Historically, the U.S. government's methods for handling confiscated digital assets can be roughly categorized. The Bitcoins in the Silk Road case were transferred to private institutional investors through public auctions after completing judicial procedures, with Tim Draper being one of the auction buyers. The BTC from the Colonial Pipeline ransom was temporarily kept in government accounts after recovery for use as case evidence and for Treasury Department records. As for FTX, its current status remains in judicial custody, with officials not formally confirming the confiscated assets as government property; most of these assets theoretically should be used for user compensation within the creditor liquidation process, rather than directly included in the national treasury reserves.

Unlike the above methods of handling confiscated Bitcoins through public auctions (like the Silk Road case), this case faces a key variable: In March 2025, the White House signed an executive order establishing a "strategic Bitcoin reserve" mechanism. This means that the BTC in the Chen Zhi case is likely to be directly converted into reserve assets held by the state rather than simply auctioned off.

Thus, the U.S. is constructing an unprecedented "on-chain asset regulatory closed loop": locking down targets through on-chain tracking → using sanctions to cut off their fiat currency export → completing legal ownership deprivation through judicial procedures → ultimately transferring assets into government control. The core of this process is not to restrict market circulation but to legally redefine the "key control rights."

Once judicial procedures confirm the assets as criminal proceeds, their attribute shifts from "cryptocurrency under personal control" to "digital asset certificates under national jurisdiction."

With the transfer of 127,271 BTC, the U.S. has become the sovereign entity holding the most Bitcoin in the world. This is not only an unprecedented confiscation action but also heralds the beginning of an era where national power systematically controls on-chain assets.

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