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 the founder of Cambodian business empire Prince Group with allegedly running a massive cryptocurrency scam that included forced labor camps.

British and Cambodian national Chen Zhi was indicted Tuesday in New York on suspicion of participating in a wire fraud conspiracy and money laundering scheme.

Chen's business was also sanctioned by the US and UK as part of a joint operation. The UK government says it has frozen assets belonging to his network, including 19 properties in London, one of which is worth almost £100 million ($133 million).

The BBC has contacted the Prince Group for comment.

US prosecutors said it was one of the largest financial transactions in history and the largest Bitcoin seizure ever, with approximately 127,271 Bitcoins in the possession of the US government.

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

The Cambodian group's website says its activities include property development as well as financial and consumer services. But the Justice Department says it runs one of the largest transnational criminal organizations in Asia.

According to the Department of Justice, unsuspecting victims were contacted online and persuaded to transfer cryptocurrency based on false promises that the funds would be invested and generate a profit.

According to court documents seen by the BBC, prosecutors alleged the company, under Chen's leadership, built and operated at least 10 fraudulent complexes across Cambodia.

Chen was accused of running complexes specifically designed to help as many victims as possible, prosecutors said.

His co-conspirators allegedly purchased millions of cell phone numbers and created “phone farms” to defraud call centers, according to court documents., from October 8.

Two of the agencies had 1,250 cellphones and monitored about 76,000 social media accounts for fraud, the documents said.

Prosecutors said the Prince Group documents included advice on building rapport with victims and told employees not to use profile photos of women who were “too pretty” to make their stories appear more truthful.

Assistant Attorney General for National Security John Eisenberg called the Prince Group “a criminal enterprise built on human suffering.”

They also trafficked workers who were held in prison-like facilities and forced to commit online fraud, affecting thousands of victims around the world, he said.

According to the Department of Justice, Chen and his associates allegedly used the proceeds of their crime for luxury travel and entertainment.

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

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

In the UK, Chen and his associates allegedly established businesses in the British Virgin Islands and invested in UK real estate. His network's assets include a £100 million office building in central London, a £12 million mansion in North London and seventeen apartments in the city, it said. British Foreign Office on Tuesday.

The sanctions, as part of a joint operation with US authorities, mean he is now barred from the UK financial system.

The Prince group was also sanctioned in the US and labeled a criminal organization.

They “ruined the lives of vulnerable people and bought houses in London to store their money,” British Foreign Secretary Yvette Cooper said.

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

The Foreign Office said Mr Chen and the Prince Group built casinos and complexes used as fraud centers and laundered the proceeds.

Four companies linked to the alleged scams – The Prince Group, Jin Bei Group, Golden Fortune Resorts World and Byex Exchange – were also sanctioned, the Foreign Ministry said.

Two scam centres, allegedly run by the Jin Bei Group and Golden Fortune Resorts, were named earlier this year in an Amnesty International report into the use of forced labor and torture in Cambodian scam centres.

According to the Foreign Office, people working at the scam centers are often foreign nationals who are lured with promises of legitimate work and then forced to commit scams under threat of torture.

These scammers operate on an “industrial scale”, including in the UK, using tricks such as fake romantic relationships to lure victims into scams, the Foreign Office said.

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