How were 120,000 Bitcoins so easily seized by the US if private keys were insecure?

127,271 Bitcoins, valued at $15 billion, were transferred from private wallets to US government control, all while the mastermind remained at large.

"Holding the private keys guarantees inalienable assets." This has long been a core tenet of the cryptocurrency world. However, in October 2025, this tenet was decisively shattered by the US Department of Justice.

In an unprecedented law enforcement action, the US government announced the seizure of 127,271 Bitcoins, valued at approximately $15 billion, from the control of Chen Zhi(Vincent), the founder of Prince Real Estate Group.

This operation was notable not only for its sheer scale but also for its subversive implications for the perceived security of cryptocurrency: even if assets remain in private wallets and even if the ringleaders remain at large, the state can still accomplish this "judicial transfer."

A Massive Scam

The central figure in this incident is Vincent, a businessman with dual British and Cambodian citizenship. He founded Prince Group, ostensibly a multinational conglomerate with interests in real estate, finance, and other fields.

However, according to the US Department of Justice's indictment, the group operates under a "two-tiered" system: externally, it presents itself as a legitimate business empire, while internally, it operates as a fund control and liquidation system for the proceeds of the fraud.

Vincent is accused of establishing an industrialized telecommunications fraud system in Cambodia. The indictment repeatedly mentions the concepts of "industry parks" and "mobile phone farms," ​​demonstrating a highly systematic operation.

These fraudulent industries are registered under the guise of service outsourcing, but in reality operate in a closed-door system. Foreign workers, attracted by "high-paying recruitment" offers, are often subject to restrictions upon entry.

Each operator manages hundreds of "connections" and uses a standardized script for social induction and investment guidance, a process similar to customer relationship management. This is the infamous "pig-killing" scam.

The US Treasury Department has determined that Prince Group is part of Southeast Asia's "industrialized online fraud ecosystem." According to US government estimates, Americans lost at least $10 billion to fraud in Southeast Asia in 2024, a 66% increase from the previous year.

Asset Tracing

Such a massive fraud empire naturally requires a complex money laundering system. The Prince Group employed a specialized on-chain money laundering technique known as the "spray-and-funnel" model.

This method repeatedly splits large amounts of crypto assets into dozens of wallets and then re-merges them to disrupt on-chain tracing. By around 2020, Vincent had amassed an illicit fortune of approximately 127,271 bitcoins.

The origin of these bitcoins is also quite complex. According to reports from on-chain analysis firms such as Elliptic and Arkham Intelligence, this batch of bitcoins closely overlaps with the 2020 theft of a large mining company called "LuBian."

In December 2020, an unusual transfer occurred from LuBian's core wallet, resulting in the theft of approximately 127,426 bitcoins. The chain even contains a small transaction from LuBian to the hacker's address with the message: "Please return our funds, and we will pay a reward."

These bitcoins remained dormant for a long time after being stolen, only becoming active in mid-2024. Their movement paths overlapped with the wallet cluster controlled by the Prince Group.

The Mystery of Seizure

For the cryptocurrency industry, the profound impact of this case lies in the fact that it demonstrates to judicial and intelligence agencies a complete process for disposing of on-chain assets: on-chain location → financial blockade → judicial takeover.

First, the "fund container" was locked down through on-chain tracking. The Bitcoin blockchain is a public ledger, and every transaction leaves a trace.

The Vincent Group attempted to launder funds using a "spray-and-funnel" model, dispersing funds from the main wallet across a large number of intermediate addresses, then briefly re-aggregating them to a small number of core addresses.

From an on-chain analysis perspective, this frequent "scatter-and-converge" behavior actually creates a unique pattern. Using a clustering algorithm, the investigative agency created a "capital flow map," confirming that these scattered addresses all pointed to a single controlling entity: Prince Group.

Subsequently, US authorities initiated financial sanctions to cut off the "cash-out channel." The Treasury Department imposed sanctions on Vincent and related entities, prohibiting any institution under US jurisdiction from transacting with them.

The Financial Crimes Enforcement Network designated key entities as "Primary Money Laundering Concerns," completely cutting off their access to the US dollar clearing system.

The final confiscation did not rely on brute-force private key cracking, but rather on direct legal seizure of "signing authority." Using a search warrant, law enforcement officers obtained mnemonics, hardware wallets, or transaction permissions, then initiated legal transactions to transfer the Bitcoin to a government-controlled escrow address.

Security Myths

This operation has sparked a profound reflection on Bitcoin security. If private keys cannot guarantee asset security, then what exactly is the basis for Bitcoin's security?

Analysis indicates that the confiscated Bitcoin wallets suffered from a private key generation vulnerability. The private keys for these wallets were generated by a flawed pseudo-random number generator.

The use of fixed offsets and patterns increases the predictability of private keys. Statistics show that over 220,000 addresses are affected by this vulnerability.

In theory, the random numbers generated by current computing systems are not truly random, but rather pseudo-random. However, with technological advancements, methods have been developed to make these numbers as close to true randomness as possible.

If the random numbers used to generate keys are not sufficiently random, attackers will have obvious loopholes to guess the key and steal the coins from the wallet.

It is worth noting that early wallets required users to randomly scroll the mouse on the screen when generating seed words (keys). This practice was intended to increase the randomness of the key through random user behavior.

Bitcoin itself is a speculative product with little inherent value, similar to a game of pass the parcel. Its value lies in its use as a tool for hiding assets. If it lacks security, is there any need for it to exist?

A New Era of Regulation

This confiscation operation not only targets a criminal organization but also publicly demonstrates the direct control of on-chain assets by state agencies. It shatters the myth that on-chain assets are inalienable.

Unlike the public auction method for confiscated Bitcoin (as in the Silk Road case), this case faces a key variable: in March 2025, the White House signed an executive order establishing the "Strategic Bitcoin Reserve."

This means that the Bitcoins in the Vincent case will likely not be simply auctioned, but directly transferred to state-held reserve assets.

The United States is establishing an unprecedented "closed loop" of on-chain asset regulation: targeting through on-chain tracking—using sanctions to cut off fiat currency exports—legally depriving ownership through judicial procedures—and ultimately transferring the assets under government control.

With the transfer of 127,271 Bitcoins, the United States has become the sovereign entity with the largest Bitcoin holdings in the world. This is not only an unprecedented confiscation action, but also heralds the beginning of an era of systematic state control over on-chain assets.

The blockchain's immutable records make it impossible for fraudsters to evade detection, even if they attempt to transfer assets years later.