The US government has taken control of more than 127,000 Bitcoin, currently valued at over $11.4 billion, following what authorities describe as one of the largest cryptocurrency forfeitures ever. This haul stems from a sophisticated operation involving international fraud, sanctions evasion, and alleged ties to terrorism. Families of 9/11 victims and survivors of other attacks are now pursuing these assets, arguing they represent proceeds linked to Iran, against which they hold substantial court judgments.
The incident(s) begins with a crypto mining venture operated by the Iran and China Investment Development Group, known as LuBian.com.
This entity reportedly helped Iran circumvent U.S. sanctions by transforming oil and natural gas into electricity for mining digital currencies.
By converting energy resources into Bitcoin, Iran could launder funds and export value without traditional financial channels.
In late 2020, an anonymous ethical hacker infiltrated the LuBian mining pool, siphoning off the Bitcoin stash.
Rather than profiting personally or negotiating with the operators—who offered a reward—the hacker turned over the wallet keys to American authorities.
The Bitcoin’s origins trace back to a darker scheme: “pig butchering” scams masterminded by Chen Zhi, a Chinese-born Cambodian businessman and head of the Prince Holding Group.
These operations involved human trafficking and forced labor in fortified compounds in Cambodia, where captives were compelled to run elaborate online frauds targeting victims globally.
Scammers built fake relationships to lure people into phony cryptocurrency investments, reaping billions in illicit gains.
Chen, portrayed by prosecutors as the architect of a syndicate fueled by exploitation, faced a U.S. indictment in October for wire fraud, money laundering, and related crimes.
He was arrested in Cambodia and extradited to China earlier this month.
Assistant Attorney General John Eisenberg condemned the enterprise, noting that it thrived on human misery, with workers trapped in prison-like settings to perpetrate scams on a massive scale.
Ironically, Chen’s company had publicly celebrated his contributions to Cambodia’s economy just months before his downfall.
Enter the terror victims: On December 26, a coalition led by Noala Fritz—whose son, a U.S. Army lieutenant, was killed in Iraq in 2007—filed a 75-page lawsuit in New York federal court.
Representing hundreds affected by attacks like the 1983 Beirut Marine barracks bombing, 1998 African embassy blasts, a 2001 Jerusalem restaurant explosion, and Iraq war abductions, the plaintiffs seek the Bitcoin under the Terrorism Risk Insurance Act.
They hold $23.2 billion in judgments against Iran for supporting groups such as al Qaeda, Hezbollah, and Hamas.
The suit claims LuBian served as Iran’s tool for dodging penalties, making the crypto assets fair game for compensation.
This move has ignited tensions among 9/11 litigants.
Attorneys for about 95% of wrongful death and injury claims from the attacks, which killed nearly 3,000 people, have signaled opposition to one faction’s bid to dominate the funds.
In a letter to a New York judge, lawyers from firms like Anderson Kill and Kreindler & Kreindler advocated for an equitable split, warning against a chaotic rush to secure shares.
Fifteen years ago, courts held Iran liable for aiding al Qaeda in 9/11, awarding over $140 billion in damages—a ruling that bolsters these claims.
Notably, no direct victims of the pig butchering frauds have yet staked claims on the Bitcoin, leaving the focus on terrorism judgments.
The Justice Department is now said to be pushing for full U.S. ownership of the assets as tainted by crime.