The U.S. Department of Justice has seized $15 billion worth of Bitcoin from a massive "pig butchering" network, officials calling it "the largest seizure action in American history."
According to the official press release from the U.S. Department of Justice (link), the U.S. Attorney's Office for the Eastern District of New York and the National Security Division of the Justice Department today filed a civil forfeiture lawsuit alleging that approximately 127,271 Bitcoins (currently valued at about $15 billion) constitute the proceeds and instruments of the defendant's fraud and money laundering scheme, previously stored in an unhosted cryptocurrency wallet held by the defendant with its private keys. These funds (defendant's cryptocurrency) are currently held by the U.S. government. This lawsuit is the largest seizure action in the history of the Department of Justice.
Furthermore, according to on-chain data analysis by PASA, a large amount of Bitcoin allegedly controlled by Chen Zhi (Prince Group) has now moved from its original wallet addresses to new addresses suspected to be controlled by the U.S. government.
The indictment released by the U.S. Department of Justice lists 25 Bitcoin addresses, which once held about 127,000 Bitcoins, claimed to be the criminal proceeds of Chen Zhi. These addresses are believed to be wallets of the LuBian mining pool, through which Chen Zhi "laundered" the scam proceeds into newly mined Bitcoins.
On-chain records show that these Bitcoins were transferred in large amounts from the aforementioned LuBian mining pool-related addresses between June and July 2024, likely to wallets controlled by U.S. authorities. Blockchain analysis firm Elliptic noted: "127,271 Bitcoins are now under the regulation of the U.S. government... The fund movements from June to July represent these Bitcoins flowing into wallets controlled by U.S. authorities.
After this transfer, there have been no further signs of these Bitcoins flowing out (not seen entering exchanges or mixers), indicating a change in control. For instance, Arkham Intelligence's trace report mentioned that this batch of over 127,000 BTC had been inactive for nearly four years since being stolen in 2020, until a wallet consolidation transfer occurred in July 2024, with no subsequent selling or laundering activities.
This series of unusual large-scale on-chain transfers coincides with the timing of the seizure action announced by the U.S. Department of Justice.
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How exactly did the U.S. obtain the keys (speculation)?
Given that Chen Zhi is still at large, industry analysts speculate that the U.S. government may not have directly obtained the private keys from Chen Zhi, but rather through other means.
Possible scenarios include:
Chen Zhi staged a coin theft: Chen Zhi might have staged a "hacking incident" to launder a large amount of Bitcoin, but this process was ultimately uncovered by U.S. law enforcement, who then obtained the relevant keys.
Hacker theft followed by law enforcement tracking: Real hackers might have stolen a large amount of Bitcoin from the LuBian mining pool at the end of 2020, which U.S. law enforcement later successfully tracked and obtained asset control from the hacker.
As Tom Robinson, co-founder of blockchain analysis company Elliptic, said: "This theft could be a money laundering strategy orchestrated by Chen Zhi to obscure fund tracking; another possibility is that the theft was real — not necessarily by the U.S. government (covertly), but more likely by someone else. U.S. law enforcement then found the thief and somehow obtained these funds from him/her."
Although the specific takeover methods have not been fully disclosed, whether through judicial assistance, technical decryption, or cooperation from involved parties, the U.S. authorities have successfully taken control of this batch of Bitcoin.
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