120,000 Bitcoins intercepted? An in-depth analysis of the regulatory dilemmas behind the "BCH Group" case.

Original Title: “Case Analysis | 120,000 Bitcoins Hijacked? Web3 Lawyers Deep Dive into the Regulatory Dilemma Behind the 'BCH Group' Case”

Original author: Crypto Salad

Source:

Reprint: Mars Finance

Introduction

In the context of tightening global cryptocurrency asset regulations, a “blockchain pursuit” spanning Cambodia, the US, and the UK has garnered everyone's attention. In October 2025, the US Department of the Treasury and the Department of Justice joined forces to launch the largest cryptocurrency financial enforcement action in history against the Prince Group in Cambodia, freezing up to 120,000 Bitcoins.

This case not only shook the blockchain industry but also impacted our traditional understanding of “financial sovereignty”: When digital assets cross borders and flow anonymously, how can sovereign nations technically track, legally sanction, and regain control in enforcement? When the United States can extend its law enforcement reach through financial networks, how should we establish our own system for recovering and judicially handling digital assets?

This article will deeply analyze the legal logic and international regulatory dilemmas behind the “BCH Group” case from four perspectives: case review, judicial basis, technical vulnerabilities, and regulatory insights, and attempt to answer an increasingly urgent question – who truly holds the sovereignty of law enforcement in the digital finance era?

1. Case Review

First, let us restore the specific case details of the BCH Group as much as possible, in order to analyze its significance.

In October 2025, the U.S. Department of the Treasury (OFAC) launched one of the largest single judicial strikes in history against the “Prince Group Transnational Criminal Organization,” sanctioning 146 members. Subsequently, the U.S. Department of Justice (DOJ) announced indictments: accusing Chen Zhi of organizing and operating a “pig butchering” type of crypto investment scam based on forced labor camps, while also being implicated in telecommunication fraud and money laundering conspiracy. Surprisingly, the DOJ claimed to have seized over 127,000 Bitcoins.

How were these Bitcoins specifically scammed? It's actually quite simple. According to the indictment, Chen Zhi led the BCH group to carry out large-scale online investment fraud, deceiving victims into investing in US dollars or cryptocurrencies. The platform superficially displayed account balances or showed profit growth, but in reality, the funds had long been transferred away and concentrated into wallets controlled by Chen Zhi. At the same time, the BCH group invested in or rented real mining operations such as LuBian Mining, and purchased computing power from the open market, making the outside world believe they were acquiring Bitcoins through mining, thus giving the appearance of “legitimate generation.”

In response to such a massive cryptocurrency fraud case, it has been reported that China established a special task force in Beijing to investigate this case as early as five years ago. However, due to the passage of time, we have not found relevant official information or news, only media reports, and therefore cannot easily determine the truth. But how did the United States and the United Kingdom manage to control such a large scale of Bitcoin all at once, and how did they extend their law enforcement reach to Cambodia, located in the distant East?

1. Source of Jurisdiction in the United States

The indictment clearly states that the BCH Group's fraud network includes global victims, including those in the United States, with one local network operating in the Brooklyn area of New York. Victims were deceived into transferring funds into the accounts of shell companies located in Brooklyn and Queens, which were then transferred back to the accounts controlled by the BCH Group and Chen Zhi through international remittances or virtual currencies. In other words, these accounts were opened in American financial institutions and settled through American financial institutions. According to the U.S. Constitution, as long as any part of the criminal conduct occurs or has consequences in the United States, jurisdiction is established. The indictment also clearly states that since the actions and consequences involved occurred in this area, the case falls under the jurisdiction of the Eastern District Court of New York.

2. Why can it be executed smoothly?

At the criminal level, U.S. judicial authorities issued a seizure order for 127,271 Bitcoins and other criminal proceeds controlled by Chen Zhi based on the Criminal Asset Forfeiture Act (18 U.S.C. §§ 981, 982). At the financial sanctions level, the U.S. Treasury Department designated the BCH Group and its associated financial network as a “Primary Money Laundering Concern” under Section 311 of the USA PATRIOT Act (31 U.S.C. § 5318A), allowing for the immediate freezing of accounts and transactions related to the U.S. financial system. Additionally, in conjunction with the Global Magnitsky Human Rights Accountability Act (22 U.S.C. § 2656), global asset freezes and transaction bans can be imposed on foreign individuals who have seriously violated human rights or engaged in significant corruption.

In conjunction with Article 41 of the Criminal Procedure Rules and the mechanism of the Mutual Legal Assistance Treaty (MLAT), the United States is able to successfully carry out measures for seizure, wanted notices, and asset disposal through blockchain custody nodes, exchanges, and multilateral cooperation.

3. Technical Vulnerability Suspicion

Why is it so easy for the United States to freeze Bitcoin storage? In addition to the powerful on-chain team behind the U.S., Crypto Salad has also heard an interesting claim from a well-known blockchain forensics and compliance technology agency, Elliptic Blog, which I would like to share with all readers:

At the end of 2020, a mining company named LuBian Mining (yes, the one previously mentioned) experienced a serious security incident. In short, there was a vulnerability in the random number generation algorithm for opening the Bitcoin safe's private key (also known as “Milk Sad”), which allowed attackers to crack the private key and transfer all the Bitcoins from its mining pool, reportedly amounting to exactly 127,000 coins. Until June-July 2024, this batch of Bitcoins showed new activity, and the wallets associated with these new activities overlapped or merged with those of the BCH Group network and the wallets controlled by Chen Zhi. Eventually, in 2025, the U.S. Department of Justice officially seized them.

Undoubtedly, among the 120,000 Bitcoins frozen from the BCH group, a considerable portion originates from the funding “contributions” of the Chinese community. However, under the current legal and technological landscape, we can hardly recover our rightful interests from them. Whether the country has launched an investigation or taken action, the “BCH group” case serves as a wake-up call: in the digital financial era, financial sovereignty is not only reflected in currency issuance but also in the effective exercise of law enforcement sovereignty. When transnational crimes are uncovered, we must have clear legal grounds, a mature technological system, and resolute law enforcement capabilities to truly protect and reclaim the assets that rightfully belong to us.

2. Conclusion

The “BCH Group” case is not the first, nor will it be the last similar case. It profoundly reminds us that while the initial regulatory policies achieve their intended goals, they may also cause us to lose some future initiative in a new round of global financial competition.

In the face of the inevitable trend of digital assets, we must find a new balance between “strict risk control” and “grasping sovereignty.” Establishing a self-controlled judicial disposal system for digital assets is an urgent issue to ensure that our country's legal dignity and law enforcement capability can extend into the digital space. Only in this way can we truly achieve “restitution according to the law” in the future, whether by confiscating it, enriching the national treasury, or proportionately liquidating and returning it to the victims, thus completing the final loop of law enforcement and effectively safeguarding the property security of the people.