A US federal court has unsealed a criminal indictment involving a massive cryptocurrency fraud scheme that could result in the government increasing its national Bitcoin reserves by $14 billion.
In a Tuesday notice from the US Justice Department, authorities said they had filed a forfeiture complaint against 127,271 Bitcoin (BTC), worth about $14.4 billion at the time of publication. The Bitcoin was tied to an indictment against Chen Zhi, founder and chair of a Cambodia-based company that was allegedly responsible for orchestrating “pig butchering” crypto investment schemes.
Civil forfeiture complaint against 127,271 Bitcoin. Source: US District Court, Eastern District of New York
The US Department of the Treasury’s Office of Foreign Assets Control sanctioned Zhi’s company, the Prince Holding Group, and its affiliates on the same day the indictment was unsealed.
According to the complaint, the US will seek forfeiture upon Zhi’s conviction in the US District Court for the Eastern District of New York, where he faces charges of wire fraud conspiracy and money laundering conspiracy. The Justice Department said the Bitcoin was “presently in the custody of the US government” amid the criminal case.
If approved by the court following Zhi’s potential conviction, the Bitcoin forfeiture would represent one of the most significant additions of cryptocurrency to the US strategic reserve since its establishment. US President Donald Trump set up national Bitcoin and crypto reserves via executive order in March.
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Some of the proceeds of the crypto scheme were allegedly used to purchase “watches, yachts, private jets, vacation homes, high-end collectibles and rare artwork.” Zhi was still at large as of Tuesday. He could face up to 40 years in prison if convicted.
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