- The U.S. Department of Justice seized $14.4 billion in Bitcoin from the alleged leader of a major international crypto scam.
- This is the largest crypto seizure in DOJ history, with prosecutors seeking to claim the funds through criminal forfeiture.
- Debate continues over whether the Bitcoin will reimburse scam victims or be added to a U.S. national Bitcoin reserve.
- Lawmakers, including Sen. Cynthia Lummis, support adding the seizure to the strategic reserve, while experts warn compensation for victims could take years.
- The U.S. government’s total Bitcoin holdings could exceed $36 billion if the seized funds become part of its reserve.
On Tuesday, the U.S. Department of Justice seized over $14.4 billion worth of Bitcoin from Chen Zhi, who is accused of leading a Cambodia-based global crypto scam network. Authorities executed the seizure as part of the government’s largest-ever crypto-related operation and have filed wire fraud and money laundering charges against Chen.
The DOJ is moving to officially take ownership of the confiscated Bitcoin through criminal forfeiture. Officials have not yet announced whether the funds will be used to pay back those affected by the scam or added to the newly proposed national Bitcoin reserve. The Treasury Department, involved in the operation, did not respond to requests for comment on how the Bitcoin will be allocated.
Some U.S. lawmakers are advocating for the funds to boost America’s crypto reserves. Sen. Cynthia Lummis stated in a public announcement, “Turning criminal proceeds into assets that strengthen America’s Strategic Bitcoin Reserve shows how sound policy can turn wrongdoing into lasting national value.” She has introduced legislation that would require the government to increase its Bitcoin holdings above $100 billion. At the same time, attorney Scott Johnsson said the United States would likely keep much of the seized Bitcoin, with victim compensation potentially delayed by the complexity of global restitution.
Experts including Ari Redbord, a former Treasury official, said it is unclear how much of the seized Bitcoin government agencies might allocate to a strategic reserve versus using it to reimburse scam victims.
According to blockchain analytics firm Arkham Intelligence, government-controlled wallets currently contain about $22 billion in Bitcoin. Adding the latest confiscation could bring total government reserves to over $36 billion, though official figures from the federal government remain unconfirmed.
In March, President Donald Trump signed an executive order creating a strategic Bitcoin reserve. By May, the Treasury Secretary had delivered a report on legal and investment issues, though details about current Bitcoin holdings were not made public. The government has yet to clarify how it will handle the seized Bitcoin or what proportion will support the reserve or be distributed to victims.
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