Bitcoin's Seizure Shock
How the Prince Group Case Revealed Bitcoin's Vulnerabilities and Re-shaped Market Perceptions #89
In this post, I’ll break down the Prince Group case, explore how the U.S. Department of Justice (DoJ) managed to seize a massive hoard of bitcoins, and touch on the technical vulnerabilities that made it possible. I’ll also look into the ripple effects on the global Bitcoin market and discuss why Bitcoin is increasingly viewed as “American.”
Terminology Explained
Pig-butchering: An online scam where fraudsters build fake relationships with victims, earn their trust, and then convince them to invest in bogus schemes, often involving cryptocurrencies.
Bitcoin Private Keys: A private key is like your house key for Bitcoin. It’s a long string of numbers and letters that lets you access and control your bitcoins.
PRNG (Pseudo-random number generator): Think of this as a password generator. If the process is truly random, the keys are strong and unique; otherwise, it becomes easy for hackers to guess your key and break in.
I. Background
Over the past few months, crypto observers have debated the causes behind Bitcoin’s price drop and sluggish performance. While many factors play a role, as Alex Krüger listed 15 of them on X, one factor in particular caught my attention:
#3: Reversed flows from crime syndicates — major flows reversed after the DoJ indictment of the Cambodian Prince Group last October.
Back in 2020, I briefly wrote about a mysterious mining pool named LuBian on my blog. As the Prince Group case developed, I realized LuBian is owned by the group’s founder and chairman.
Plus, after the DoJ announced the case, several people approached me and expressed their concerns about Bitcoin. I’ve also read some posts in chat rooms questioning whether Bitcoin is still censorship-resistant after what happened to Prince Group’s Bitcoin holdings.
All of the above prompted me to dive in and understand more about this event.
II. Prince Group Case: From Tycoon to Seizure
On Oct. 14, 2025, the DoJ indicted Vincent Zhi Chen, founder and chairman of Cambodia’s Prince Group, for “Operating Cambodian Forced-Labor Scam Compounds Engaged in Cryptocurrency Fraud Schemes,” and filed a civil forfeiture complaint against 127,271 bitcoins owned by him, worth $15B. The DoJ believes these were “proceeds and instrumentalities of the defendant’s fraud and money laundering schemes.”
This is the largest forfeiture in DoJ history. However, the DoJ did not specify how it accessed Vincent’s wallets in its filings.
Vincent Zhi Chen’s empire was allegedly built on large-scale online scams, generating tens of millions of U.S. dollars in daily revenue through forced-labor compounds across Southeast Asia. The DoJ alleges these operations targeted victims worldwide, leading to its enforcement actions.
Let’s see how this event was interpreted internationally, and why it matters for Bitcoin’s security, sovereignty, and price performance.
III. Chinese Government’s Perspective: Reframing the Seizure
After the DoJ announced the indictment of Vincent and the seizure of the bitcoins, the Chinese government quickly recast the event as a state-sponsored cyberattack rather than a straightforward law enforcement action.
In November 2025, the central government-backed National Computer Virus Emergency Response Center (CVERC) issued a report claiming that as early as 2020, the U.S. had hacked the LuBian mining pool — which, owned by Vincent, had operations in both China and Iran — and stole 127,272 bitcoins from him, the exact number of bitcoins the DoJ claimed to have seized in October 2025.
CVERC also stated that blockchain analysis conducted by Elliptic and Arkham matched the addresses of the seized bitcoins to those lost in the alleged 2020 attack.
The report used the phrase “thieves robbing thieves,” portraying the U.S. seizure as a state-level cyber operation. This narrative has since dominated Chinese, as well as some global media, raising questions about where law enforcement ends and cyber intervention begins and challenging the perception that Bitcoin is immune to government interference.
Technically, the report claimed that LuBian’s private keys were generated using a weak, non-cryptographic PRNG process, resulting in low randomness, similar to creating a weak password, making them susceptible to hacking.
As the Prince Group case is reframed from a law enforcement action to a cross-border, government-sponsored cyberattack, the boundaries between technical vulnerability and political maneuvering become blurred, setting the stage for broader market impacts.
IV. Impact on Illegal and Legal Actors: Ripple Effects and Market Response
The Chinese government’s redefinition of the U.S. seizure as a cyberattack certainly sparked panic among crime syndicates and illicit actors. Suddenly, even supposedly seizure-resistant assets like Bitcoin seemed vulnerable to global government intervention. This fear led to rapid withdrawals and reversed flows from criminal groups, the very “reversed flows from crime syndicates” scenario specified by Alex Krüger in his X post.
“Reversed flows from crime syndicates” doesn’t mean criminal money dictates bitcoin prices. But in a permissionless market, legal and illegal capital share the same liquidity pool. When one source of liquidity disappears, the market’s equilibrium shifts, leading to turbulence.
To get a sense of the scale of illicit activity: according to Chainalysis, in 2024 alone, $5.84 billion was lost to scams in the crypto space.
The removal of illicit liquidity can be positive for the market in the long run, but painful in the short run.
Legitimate actors, such as fund managers, entrepreneurs, and regulatory arbitrage seekers, also felt the shockwaves. With the U.S. government demonstrating cross-border enforcement power, many reassessed their risk exposure, leading to reduced liquidity and a more cautious approach to bitcoin holdings.
V. Bitcoin Is Becoming More American: Perception and Power
The current U.S. administration’s pro-Bitcoin stance signals to the world that Bitcoin is strategic for America. This event, combined with cross-border enforcement, has led many outside the U.S. to view Bitcoin as increasingly American.
Data also supports this perception. River’s report reveals that the U.S. holds 40% of total available bitcoins, and 32 publicly traded U.S. companies hold bitcoin in their treasuries, representing 95% of global public companies that own bitcoin.
The preference for USDT (Tether) over USDC (USD Coin) among international users reflects this perception from another angle. I still remember a conversation during Token2049 in Singapore a couple of years ago. The person told me:
“I prefer USDT to USDC because USDC is controlled and scrutinized by the U.S. government, which is scary.”
This sentiment underscores the growing belief that U.S. jurisdiction and power can override Bitcoin and cryptocurrency’s ethos of decentralization.
The Prince Group case has thus stamped Bitcoin with an “American” identity, loud and clear, in the eyes of many global users.
VI. Sovereignty in Theory vs. Practice: Lessons and Implications
Bitcoin’s founding narrative rests on two pillars: fixed supply and censorship resistance. But as this case shows, self-custody only works if executed flawlessly. Most capital doesn’t operate under perfect conditions. It lives in exchanges, custodians, regulated structures, and jurisdictions — all subject to government power.
The lesson here isn’t that Bitcoin failed. The protocol itself has no problem. Rather, sovereignty in theory and sovereignty in practice are not the same.
That realization may change how investors and market participants, especially those outside the U.S., allocate capital.
And it may make them more cautious.
I am Coco Kee, author and host of World Ledger with Coco Kee newsletter and podcast, a rebrand from BlockchainAsia, the Co-founder of Kee Global Advisors, and a dog lover with a Goldendoodle Lucy.
Follow me on LinkedIn | X: @CocoKee or email me: worldledger@substack.com
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