A US federal court has dismissed criminal charges related to a massive cryptocurrency fraud scheme that could have led to the government increasing the national Bitcoin reserve by $14 billion.
In a Tuesday notice from the U.S. Department of Justice, the agency announced that it had filed a claim for forfeiture of 127,271 Bitcoin (BTC), worth approximately $14.4 billion at the time of publication. Bitcoin was linked to charges against Chen Zhi, the founder and chairman of a Cambodia-based company, who allegedly orchestrated a “pig slaughter” crypto investment scheme.
The U.S. Treasury Department’s Office of Foreign Assets Control sanctioned Shi’s company, Prince Holding Group, and its affiliates on the same day the indictment was unsealed.
The U.S. will seek forfeiture upon conviction in the U.S. District Court for the Eastern District of New York, where Mr. Gee is charged with wire fraud conspiracy and money laundering conspiracy, according to the complaint. The Department of Justice said Bitcoin is “currently under the control of the U.S. government” amid a criminal case.
If approved by the court following Gee’s possible conviction, the confiscation of Bitcoin would be one of the most significant additions to the U.S. strategic reserve since the cryptocurrency’s creation. In March, US President Donald Trump established a national reserve for Bitcoin and cryptocurrencies through an executive order.
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Some of the proceeds from the cryptocurrency scheme were said to have been used to purchase “watches, yachts, private jets, vacation homes, luxury collectibles, and rare art.” Gee was still at large as of Tuesday. If convicted, he could be sentenced to up to 40 years in prison.
Strategies for funding US crypto reserves
Since President Trump established the U.S. Government Strategic Bitcoin and Digital Asset Reserve through an executive order in March, the stockpile has grown to potentially contain approximately 198,000 Bitcoins, worth more than $22 billion as of the publication of this article. Zhi’s case, along with the crypto confiscation, could result in a total reserve of around 325,000 BTC, or $36 billion at current prices.
In addition to cryptocurrencies seized through civil forfeiture and criminal proceedings, some White House advisers and lawmakers have suggested alternative ways to add to U.S. reserves.
In November, Wyoming Sen. Cynthia Lummis suggested the government could convert some of its gold reserves into Bitcoin. The United States holds more than 8,100 tons of gold in facilities such as Fort Knox.
However, it is unclear whether President Trump’s executive order has the authority to allow the government to purchase Bitcoin and other tokens through the sale of other assets. Some advisers, including Treasury Secretary Scott Bessent, have suggested that there is a budget-neutral way to buy Bitcoin for reserves, but it could require approval from Congress.
According to Nansen data, the price of Bitcoin at the time of publication was $112,738.
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