Key takeaways:
- US moves to seize 127,000 Bitcoins in largest fraud case yet
- Confiscated cryptocurrency could nearly double national reserves
- Billion-dollar crypto fraud shows extreme luxury purchases
A US federal court has lifted the secrecy on a high-profile criminal case involving a massive cryptocurrency fraud scheme that could potentially add $14 billion worth of Bitcoin to the government’s national reserves.
On Tuesday, the US Department of Justice announced it had filed a lawsuit seeking the seizure of 127,271 Bitcoins, valued at approximately $14.4 billion as of press time. The cryptocurrency is linked to the indictment of Chen Zhi, the founder and chairman of a Cambodian company accused of orchestrating fraudulent investment schemes.
The US Treasury Department’s Office of Foreign Assets Control also imposed sanctions on Zhi’s company, Prince Holding Group, and related entities on the same day the indictment was unsealed.
According to court documents, the US is seeking forfeiture of the Bitcoins if Zhi is convicted in the United States District Court for the Eastern District of New York. He has been charged with conspiracy to commit wire fraud and conspiracy to commit money laundering.
The Justice Department stated that the Bitcoins are “currently under the control of the US government.”
Living a luxurious life with stolen funds
Some of the proceeds from the fraudulent scheme were allegedly used to purchase watches, yachts, private jets, country houses, expensive collectibles, and rare works of art.
As of Tuesday, Zhi remains on the run. If convicted, he faces up to 40 years in prison.
Strategies for replenishing US cryptocurrency reserves
Since Trump established the US government’s Strategic Bitcoin and Digital Asset Reserve in March, holdings have grown to around 198,000 Bitcoins, worth over $22 billion as of press time. Adding the confiscated Bitcoins from the Zhi case could bring the reserve to approximately 325,000 BTC, or $36 billion at current prices.
Beyond seized cryptocurrencies in civil and criminal cases, some White House advisers and lawmakers have proposed alternative methods for replenishing US reserves.
In November, Wyoming Senator Cynthia Lummis suggested converting some of the nation’s gold reserves into Bitcoin. The US currently stores more than 8,100 metric tons of gold in vaults such as Fort Knox.
However, it remains unclear whether Trump’s executive order allows the government to purchase Bitcoin or other digital assets by selling other holdings.
Some advisers, including Treasury Secretary Scott Bessent, argue that budget-neutral options exist, though congressional approval may be required.