China Takes Custody of Alleged Pig Butchering Mastermind Behind Record BTC Seizure
- Keyword Financial
- Jan 7
- 6 min read
Introduction
Chinese authorities have taken custody of Chen Zhi, a businessman described by U.S. officials as a central figure in a major Bitcoin scam and money laundering operation linked to a record $15B bitcoin seizure. Chen, 38, is the chairman and founder of Cambodia-based Prince Group, a conglomerate that U.S. and U.K. authorities allege was used as cover for transnational criminal activity; Prince Group has denied the allegations.
Chen’s return to China follows his arrest in Cambodia on January 6 alongside two associates (Xu Ji Liang and Shao Ji Hui) after joint Cambodian–Chinese investigations. Cambodian authorities said cooperation with Beijing enabled the deportation to China, which was facilitated after Chen’s Cambodian citizenship was revoked in December 2025. U.S. enforcement actions in October sought to seize more than 127,000 BTC allegedly tied to wallets controlled by Chen’s network, with sanctions extending to numerous crypto wallets holding hundreds of millions in Bitcoin.
Investigators connect the network to pig butchering scams—trust-building fraud that funnels victims into fake crypto trading platforms before funds vanish—then route proceeds through shell companies, exchanges, and mining operations into private wallets. With Chen now under Chinese jurisdiction, China prosecution could proceed under laws that allow pursuing serious crimes committed abroad, including fraud, money laundering, and human trafficking, with penalties that can be severe; asset forfeiture and international coordination may shape potential victim compensation. The case also reflects a wider global crackdown on crypto fraud across Southeast Asia, with major crypto firms and analytics partners helping trace, freeze, and recover illicit funds.
Background
The Chen Zhi case marks a turning point in international cryptocurrency enforcement—and underscores the evolving threat landscape facing digital asset ecosystems.
On January 6, 2026, Chinese authorities took custody of Chen Zhi, the 38-year-old founder and chairman of Cambodia's Prince Group, following his deportation from Phnom Penh. U.S. federal prosecutors have linked Chen to approximately $15 billion in Bitcoin—the largest cryptocurrency seizure ever connected to online fraud—and allege that his conglomerate served as the operational backbone for a sprawling "pig butchering" network responsible for billions in losses worldwide.
The case represents a landmark moment in transnational cryptocurrency enforcement, involving coordinated action from the United States, United Kingdom, Cambodia, South Korea, and now China.
Understanding the Alleged Operation
What Is Pig Butchering?
Pig butchering (known as sha zhu pan in Mandarin) is a long-con investment fraud scheme that has become one of the fastest-growing categories of financial crime globally. Unlike traditional phishing attacks, these scams rely on prolonged social engineering:
Initial Contact: Fraudsters reach out via dating apps, social media, or messaging platforms, often posing as attractive professionals or successful investors.
Trust Building: Over weeks or months, they cultivate emotional rapport with victims—the "fattening" phase.
Investment Introduction: Once trust is established, victims are directed to fraudulent cryptocurrency trading platforms that display fabricated returns.
Extraction: After victims invest substantial sums, the platforms become inaccessible, and the scammers vanish with the funds.
According to Chainalysis, pig butchering revenue grew by 40% year-over-year in 2024, with deposits to these schemes increasing by approximately 210%. The FBI's Internet Crime Complaint Center reported that U.S. consumers lost $3.6 billion to investment fraud in 2024—much of it attributed to pig butchering operations originating in Southeast Asia.
The Prince Group's Alleged Role
Prince Group launched in Cambodia in 2015 with interests spanning real estate, banking, and hospitality. Publicly, it operated as a legitimate regional conglomerate. However, U.S. and U.K. authorities have alleged that the organization functioned as a transnational criminal organization (TCO), facilitating:
Construction and operation of "scam compounds" staffed by trafficked laborers
Money laundering through a network of over 100 shell companies across multiple jurisdictions
Integration of illicit proceeds into legitimate Cambodian economic sectors
The U.S. Treasury Department sanctioned 146 entities and individuals connected to Prince Group, including Prince Bank Plc. and Prince Huan Yu Real Estate Cambodia Group Co. Ltd. The U.K. imposed parallel sanctions, and South Korea followed with its largest-ever independent sanction measure targeting transnational crime.
Prince Group has publicly denied all allegations.
Money Laundering: How Illicit Crypto Moves Through the System
Money laundering is the process by which criminals disguise the origins of illegally obtained funds. In cryptocurrency-based schemes, this typically involves:
Layering: Moving funds through multiple wallets, mixers, or decentralized exchanges to obscure transaction trails
Integration: Converting cleaned cryptocurrency into fiat currency or legitimate assets
Investigators allege that Chen's network consolidated proceeds through crypto exchanges, mining operations, and shell companies before depositing them into private Bitcoin wallets now subject to U.S. forfeiture proceedings.
The Financial Crimes Enforcement Network (FinCEN) also took action against Huione Group, a Cambodian financial services conglomerate identified as a critical laundering node. FinCEN found that Huione processed at least $4 billion in illicit proceeds between 2021 and 2025, including funds tied to North Korean cyber heists and Southeast Asian scam syndicates.
Asset Forfeiture and Victim Compensation
What Is Asset Forfeiture?
Asset forfeiture is a legal process that allows governments to seize property connected to criminal activity. In cryptocurrency cases, this involves identifying and freezing wallets containing illicit funds.
In October 2025, federal prosecutors filed to seize over 127,000 Bitcoin tied to wallets allegedly controlled by Chen Zhi and his associates. At prevailing market prices, this represented approximately $15 billion—the largest cryptocurrency forfeiture in history.
Chinese authorities are expected to pursue parallel asset recovery. Under international cooperation frameworks, seized assets may ultimately be allocated to victim restitution funds, though such processes typically take years to resolve and require court approval.
Industry Cooperation
Private sector collaboration has proven essential in tracing and freezing illicit funds. Tether, Binance, Coinbase, OKX, and blockchain analytics firm Chainalysis have all assisted law enforcement in identifying wallets linked to pig butchering operations. In August 2025, these entities worked with Asia-Pacific authorities to freeze $49.6 million in USDT traced to a global scam ring.
What Happens Now? The Chinese Prosecution Path
With Chen Zhi now in Chinese custody, Beijing's criminal justice system takes the lead. Chinese law permits prosecution of citizens for serious crimes committed abroad, particularly offenses involving:
Large-scale fraud
Money laundering
Human trafficking
While official charges have not yet been announced, historical precedent in similar cases has resulted in severe penalties, including life imprisonment. In cases involving documented violence or forced labor, China has imposed capital punishment.
The United Nations estimates that over 100,000 trafficked workers are involved in scam compound operations across Cambodia alone. If human trafficking charges are filed, the stakes for Chen escalate significantly.
Implications for the Digital Asset Industry
Regulatory Momentum
The Chen Zhi case arrives amid intensifying global focus on cryptocurrency-enabled crime. Key developments include:
Scam Center Strike Force: In November 2025, the U.S. Department of Justice launched an interagency task force specifically targeting pig butchering operations, estimating that such schemes defraud Americans of nearly $10 billion annually.
Enhanced AML/KYC Scrutiny: Financial institutions, social media platforms, and internet service providers face increasing pressure to detect and report misuse of domestic infrastructure by fraudsters.
AI-Powered Fraud: According to Chainalysis, revenue for AI service providers on illicit marketplaces grew 1,900% in 2024, as scammers deploy deepfakes and automated phishing campaigns.
Compliance Considerations
For firms operating in the digital asset space, the enforcement trajectory is clear: robust Anti-Money Laundering (AML) and Know Your Customer (KYC) controls are no longer optional. The U.S. government has signaled that it views domestic platforms as part of the infrastructure being weaponized by transnational criminal organizations.
Voluntary self-reporting of suspicious activity, investment in transaction monitoring technology, and proactive engagement with law enforcement can mitigate regulatory and reputational risk.
The Broader Picture
The Prince Group case is not an isolated incident—it reflects a broader criminal ecosystem that has industrialized fraud at scale. From Myanmar to Cambodia to Laos, scam compounds have proliferated, often operating with tacit tolerance from local authorities and generating revenue that rivals legitimate economic sectors.
For the DeFi and fintech communities, the lesson is twofold:
Transparency is a feature, not a bug. Blockchain's inherent traceability has enabled investigators to follow the money in ways that would be impossible with traditional financial instruments.
Ecosystem integrity requires vigilance. The reputational spillover from high-profile fraud cases affects legitimate participants. Industry-wide investment in compliance infrastructure strengthens the entire ecosystem.
As Chen Zhi awaits his fate in China, the global enforcement apparatus continues to tighten. The $15 billion Bitcoin seizure may be a record today—but the trajectory of crypto crime suggests it won't be the last.
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