Brooklyn prosecutors indicted Chen Zhi on charges that he led a forced‑labor crypto fraud network and charged him with conspiracy to commit wire fraud and conspiracy to commit money laundering; investigators say the operation stole millions from at least 250 U.S. victims and traced about $14 billion in bitcoin and other assets to the broader network, including a publicly cited loss of about $400,000 by a single victim. Cambodian authorities detained Chen, revoked a citizenship linked to his businesses, and extradited him to China, leaving the Brooklyn indictment active while U.S. officials seek custody or cooperation; investigators are preserving evidence, pursuing co‑conspirators, and pursuing asset measures and forfeiture. Public filings and law‑enforcement statements describe workers confined in compounds who were forced to run romance and investment scams, shepherd victims into fake trading dashboards that displayed fabricated gains, and obstruct withdrawals by demanding fees and rerouting deposits into wallets and bank accounts controlled by the network. Authorities report proceeds moved through controlled wallets, shell companies, OTC brokers, online gambling fronts, property purchases, and crypto mining operations using rapid wallet hops, cross‑platform transfers, high‑risk exchanges, mixers, and cross‑chain swaps to obscure provenance. U.S. and U.K. officials imposed sanctions on Chen and affiliated entities and reported at least $100 million in property freezes including London real estate and other accounts under court orders. Law enforcement combined indictments, cross‑border arrest and extradition efforts, asset restraints, sanctions, wallet tracing, financial records, travel data, and on‑site evidence to build the case and to preserve assets for potential forfeiture. Officials allege beatings, confinement, and payments to officials that enabled movement of people and funds inside the compounds. Authorities and industry officials advised Web3 operators to strengthen adaptive KYC and AML controls, implement adaptive risk scoring and cross‑chain wallet analytics, integrate rapid screening for sanctioned entities and politically exposed persons, prepare playbooks for rapid freezes and law enforcement requests, preserve chain evidence during incident response, monitor exposure to high‑risk regions and counterparties, and tighten oversight and AML controls for OTC flows and third‑party vendors. Prosecutors can continue to pursue co‑conspirators, seek additional forfeiture, and expand sanction designations, and any U.S. trial or custody transfer depends on whether Chinese authorities agree to transfer custody or cooperate on evidence sharing; exchanges and service providers are advised to update transaction monitoring and counterparty screening and to treat linked funds and counterparties as high risk. 

Source: https://web3businessnews.com/crypto/chen-zhi-global-crypto-fraud/

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