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A Chinese-born billionaire accused of running a vast scam network has been extradited from Cambodia to China, where he faces fraud and other criminal charges. His business has described the charges as “baseless”.
So what? Not long ago, Chen Zhi was considered untouchable. A tycoon who ostensibly built his wealth through real estate, he was an adviser to Cambodia’s prime minister and received the country’s highest honorary title. His arrest has thrown light on a vast industry that is
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worth between $50bn and $70bn globally;
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built on the suffering of countless trafficked workers; and
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so large that it has become one of the biggest economic sectors in Southeast Asia.
Crackdown. Chen’s detention earlier this month came after the US Department of Justice seized more than $14bn of bitcoin from his business empire, the Prince Group, which was also hit with American and British sanctions. Kash Patel, the FBI director, called it “one of the largest financial fraud takedowns in history”.
Making the case. US prosecutors accuse Chen of using the Prince Group as a front for “industrial scale” online fraud. They allege that victims were tricked into transferring large amounts of cryptocurrency to his businesses, promising it would be invested. The operation reportedly centred on at least 10 scam sites built at various sites in Cambodia.
More accusations. The DoJ also claims that the enterprise workers were kept in prison-like conditions and forced to lure people into fake romantic relationships. Chen allegedly used the proceeds to fund a lavish lifestyle, including a £12m mansion in London.
Setting up shop. Chen moved from China to Cambodia about 15 years ago, when Cambodia was undergoing a construction boom juiced by Chinese cash. He went on to give up his Chinese nationality and become a citizen of Cambodia, where he founded an airline, built luxury shopping malls and cultivated deep ties with the elite.
Under pressure. Chen’s downfall began in 2020, when China started prosecuting scam mules allegedly linked to the Prince Group and set up a task force to investigate the company’s activities. South Korea, Taiwan and other countries also took action against entities purportedly linked to the group, although Chen still had a sanctuary in Cambodia.
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New approach. This changed last month when Phnom Penh revoked Chen’s Cambodian citizenship and its national bank announced the liquidation of Prince Bank as part of a wider move against alleged scam operations.
Big business. Cambodia’s decision to arrest Chen is one indicator of how the country is finally bowing to Chinese pressure to target alleged scam sites. These are huge enterprises located throughout Southeast Asia. The US Institute of Peace estimates that scam centres in Mekong countries are worth nearly 40% of their combined formal economies.
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Lured. These facilities suck in hundreds of thousands of workers from across Asia, Africa and the Pacific, who are often trafficked to the region with the promise of fake jobs and work under the threat of torture. The UN has described this as a “human rights crisis”.
How the centres work. Online scams range from bogus cryptocurrency investments to romance and e-commerce fraud. The practice is often referred to as “pig butchering”, in which victims are groomed through trust building before being defrauded.
What’s more…. Takedowns will set back scam operations, many of which operate with the tacit permission of local authorities. But they may also push them underground.
Photograph by CHINA'S MINISTRY OF PUBLIC SECURITY/Getty Images