Federal prosecutors have seized $15 billion from the alleged kingpin of an operation that used imprisoned laborers to trick unsuspecting people into making investments in phony funds, often after spending months faking romantic relationships with the victims.
Such "pig butchering" scams have operated for years. They typically work when members of the operation initiate conversations with people on social media and then spend months messaging them. Often, the scammers pose as attractive individuals who feign romantic interest for the victim.
Forced labor, phone farms, and human suffering
Eventually, conversations turn to phony investment funds with the end goal of convincing the victim to transfer large amounts of bitcoin. In many cases, the scammers are trafficked and held against their will in compounds surrounded by fences and barbed wire.
On Tuesday, federal prosecutors unsealed an indictment against Chen Zhi, the founder and chairman of a multinational business conglomerate based in Cambodia. It alleged that Zhi led such a forced-labor scam operation, which, with the help of unnamed co-conspirators, netted billions of dollars from victims.
“The defendant CHEN ZHI and his co-conspirators designed the compounds to maximize profits and personally ensured that they had the necessary infrastructure to reach as many victims as possible,” prosecutors wrote in the court document, filed in US District Court for the Eastern District of New York. The indictment continued:
For example, in or about 2018, Co-Conspirator-1 was involved in procuring millions of mobile telephone numbers and account passwords from an illicit online marketplace. In or about 2019, Co-Conspirator-3 helped oversee construction of the Golden Fortune compound. CHEN himself maintained documents describing and depicting “phone farms,” automated call centers used to facilitate cryptocurrency investment fraud and other cybercrimes, including the below image:
Prosecutors said Zhi is the founder and chairman of Prince Group, a Cambodian corporate conglomerate that ostensibly operated dozens of legitimate business entities in more than 30 countries. In secret, however, Zhi and top executives built Prince Group into one of Asia’s largest transnational criminal organizations. Zhi's whereabouts are unknown.
As part of the crackdown, federal officials seized bitcoin now worth $15 billion. Blockchain analysis firm Elliptic said Tuesday that much of those funds had been held previously by LuBian, a bitcoin-mining business that controlled almost 6 percent of global bitcoin mining before disappearing in February 2021.
Elliptic said there was evidence the transfer could have been part of a hack that cracked cryptographic keys securing the funds. The analysis firm also held out the possibility that the theft was staged. Adding further mystery, it’s unknown how federal officials managed to obtain the cryptographic keys required to seize the funds from Zhi.
It’s hard for many people to comprehend how so many people, many of them well-educated and holding well-paying jobs, can be tricked into handing over their life savings to an online love interest that they have never met in person. The longevity of pig butchering and the billion-dollar sums it nets demonstrate that the scams work more often than many might think. Pig butchering is made all the more perverse by its reliance on what prosecutors said was the “human suffering” of both those on the front lines and the victims they preyed on.
“Zhi allegedly victimized countless individuals: forcing thousands to serve as trapped accomplices and targeting countless others for their wallets,” Christopher G. Raia, FBI assistant director in charge of the New York field office, said. “By leveraging his co-conspirators and political influence, this alleged operation plagued all corners of the globe and evaded law enforcement detection for years.”
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