Bitcoin worth $14bn seized in US-UK crackdown on alleged scammers

The US government has seized more than $14bn (£10.5bn) in bitcoin and charged Cambodian business empire founder Prince Group with allegedly masterminding a massive cryptocurrency scam.

Chen Zhi, a British and Cambodian national, was charged in New York on Tuesday with participating in a wire fraud conspiracy and running a money laundering scheme.

Mr Chen’s businesses were also sanctioned by the US and UK as part of a joint operation. The UK government said it was freezing assets held by the network, including 19 properties in London worth around £100 million ($133 million).

The BBC has contacted Prince Group for comment.

US prosecutors say it was one of the largest financial liquidations in history and the largest Bitcoin seizure to date, with approximately 127,271 Bitcoins held by the US government.

Mr Chen, who remains at large, is accused of being the mastermind behind a “sprawling cyber fraud empire” operating under his multinational company Prince Group. US Department of Justice (DOJ).

On the website of the Cambodia-based group, it is stated that its areas of activity include real estate development, finance and consumer services. But the Justice Department alleges he runs one of Asia’s largest transnational criminal organizations.

The Justice Department said unwitting victims were contacted online and persuaded to transfer the cryptocurrency based on false promises that the funds would be invested and a profit would be made.

Prosecutors alleged that the company built and operated at least ten fraudulent facilities in Cambodia under Mr Chen’s management, according to court documents reviewed by the BBC.

Prosecutors said Mr. Chen was accused of running specially designed settlements to reach as many victims as possible.

Accomplices allegedly obtained millions of mobile phone numbers and set up “phone farms” to commit call center fraud, court documents say, Dated 8 October.

Two of those facilities housed 1,250 cell phones, which controlled approximately 76,000 fraudulent social media accounts, according to the documents.

Prosecutors said Prince Group documents included tips for establishing rapport with victims and advised employees not to use profile photos of “too beautiful” women to make the accounts appear more real.

Assistant Attorney General for Homeland Security John A Eisenberg described the Prince Group as “a criminal enterprise built on human suffering.”

There is also trafficking of workers imprisoned in prison-like compounds and forced to commit online fraud, with thousands of victims targeted worldwide, he said.

The Justice Department said Mr. Chen and his accomplices allegedly used proceeds of crime for luxury travel and entertainment.

They also made “extravagant” purchases such as watches, private jets and rare works of art, including the purchase of a Picasso painting from a New York City auction house, the department said.

If convicted, Mr. Chen faces a maximum sentence of 40 years in prison.

In Britain, Mr Chen and his accomplices allegedly set up businesses in the British Virgin Islands and invested in properties in the UK. It was stated that his network’s assets included a £100 million office building in central London, a £12 million mansion in North London and seventeen flats in the city. UK foreign office on Tuesday.

His sanction as part of a joint operation with US authorities means he is now outside the UK’s financial system.

The Prince Group has also been sanctioned and labeled a criminal organization in the US.

British Foreign Secretary Yvette Cooper said they were “destroying the lives of vulnerable people and buying houses in London to hide their money.”

Cooper said: “Together with our US allies, we are taking decisive action to combat the growing transnational threat posed by this network – defending human rights, protecting British citizens and keeping dirty money off our streets.”

The foreign office said Mr. Chen and the Prince Group built sites used as casinos and fraud centers and laundered the proceeds.

The foreign office said sanctions were also imposed on four businesses linked to the alleged fraud – The Prince Group, Jin Bei Group, Golden Fortune Resorts World and Byex Exchange.

Two fraud centers allegedly operated by Jin Bei Group and Golden Fortune Resorts were named earlier this year in Amnesty International’s report on the use of forced labor and torture in fraud centers in Cambodia.

The State Department said people working in fraud centers are often foreign nationals who are deceived by the promise of a legitimate job and then forced to commit fraud under threat of torture.

The foreign office said these fraudsters were operating on an “industrial scale”, including in the UK, and were using tricks such as fake romantic relationships to persuade victims to be defrauded.

Fraud Minister Lord Hanson said: “Fraudsters prey on the most vulnerable by stealing their life savings, breaking trust and ruining lives. We will not tolerate this.”