Author: Zhang Feng
In the gray area of international law and finance, a globally shocking asset battle has quietly come to an end, but its outcome is like a thunderbolt. Assets worth up to 15 billion RMB under the name of Chen Zhi, founder of the Prince Group, were formally confiscated and transferred to the US Department of Justice based on a US court ruling, without any criminal conviction and without him ever setting foot on US soil.
This event is by no means a simple transnational law enforcement cooperation, but a complex picture full of legal games, technical investigation, long-arm jurisdiction, and geopolitical implications. Is it a classic example of combating transnational crime, or a terrible precedent for the unlimited expansion of US judicial power? To answer this question, let's delve into each link behind it.
I. "Money Laundering and Fraud" and "Long-Arm Jurisdiction" The core of the U.S. Department of Justice's charges against Chen Zhi and his Prince Group revolves around "money laundering" and "fraud." According to publicly available court documents, the U.S. accuses Chen Zhi of using a complex network of offshore shell companies to launder funds from a range of illegal activities, including telecommunications fraud and online gambling proceeds, ultimately injecting them into the U.S. real estate market and other financial systems to legitimize them. However, the key point of this case is that most of these alleged "upstream crimes" did not occur within the United States. For example, the telecommunications fraud targeting Chinese citizens primarily occurred in China, both in terms of the act itself and the consequences. So, how does the U.S. Department of Justice have jurisdiction? This brings us to the highly controversial "long-arm jurisdiction" principle within the US legal system. The US's logic is as follows: First, funds flow through the US; the illicit funds laundered by Chen Zhi's team were transferred through the US banking system or ultimately invested in US assets (such as real estate and businesses). As long as a single instance of illicit funds enters the US financial system, the US judicial system believes it has jurisdiction. Second, it harms US interests; the US further alleges that these criminal activities "harmed the integrity of the US financial system and national security." Defining money laundering through the US financial system as an infringement on US national interests is a common justification used by the US to expand its extraterritorial jurisdiction. Therefore, while the ostensible charge is "money laundering," its deeper basis lies in "long-arm jurisdiction" based on the principle of "minimum contact." This laid the legal foundation for all subsequent investigations, freezing, and confiscation actions, and became one of the focal points of the case: Is the United States using its financial hegemony as a backing to shape itself into a global financial police force? II. Financial Intelligence and Data Surveillance To uncover a complex, multi-national criminal network and achieve the court standard of "conclusive evidence," the U.S. Department of Justice employed its powerful, multi-dimensional investigative methods. Financial Intelligence Analysis: This was the breakthrough in the case. The Financial Crimes Enforcement Network (FinCEN) collaborated with major financial institutions to establish a Suspicious Transaction Reporting (STR) system. Investigators identified large amounts of funds flowing from offshore havens (such as the Cayman Islands and the British Virgin Islands) to specific accounts and real estate projects in the United States by tracing unusual fund flows. By analyzing the "paths" of these funds, they gradually pieced together the network of shell companies controlled by Chen Zhi. Cross-border data retrieval: Under the authorization of the CLOUD Act, U.S. law enforcement agencies can directly request U.S.-based technology companies (such as Google, Microsoft, and Apple) to provide user data stored on servers located overseas. Investigators likely obtained Chen Zhi and his accomplices' emails, cloud-stored files, and communication records through this method. This electronic evidence became key to constructing their criminal intent and conspiracy. Covert surveillance and undercover operations: Court documents show that investigators used informants or undercover agents to contact members of Chen Zhi's team and record their conversations about the nature and source of funds. This type of "entrapment" or covert evidence gathering is commonplace in the United States' fight against complex financial crimes. International cooperation and "tainted witnesses": The success of this case is inseparable from the cooperation of countries and regions with judicial cooperation agreements with the United States. It cannot be ruled out that "tainted witnesses" within Chen Zhi's criminal group reached a plea bargain with the US prosecutors, providing core evidence such as the group's internal operating methods, keys, and ledgers in exchange for reduced punishment. This multi-dimensional investigative model of "technology + law + cooperation" ensures that even though Chen Zhi's team operates covertly, their criminal network is virtually impossible to hide from the national-level investigative apparatus. III. Civil Forfeiture: Highly Controversial This procedure has several notable characteristics: Lower burden of proof: It does not require meeting the "beyond a reasonable doubt" standard in criminal cases; only "preponderance of evidence" is needed, meaning proving that the assets are more likely to have originated from illegal activities than legitimate ones. Defendant (owner) must prove their innocence: Once the assets are frozen, Chen Zhi, as the claimed legal owner, needs to proactively file a lawsuit to prove the legal origin of the assets. If he cannot provide clear and complete proof of legal origin, or if he is unwilling or unable (e.g., facing extradition risks in a third country) to appear in court in the United States, the court can issue a default judgment and order the confiscation of the assets.
Swift and Covert Action: To prevent asset transfer, the Department of Justice can secretly apply to a judge for a freezing order in advance, instantly freezing all target assets in the United States and even through the jurisdiction of cooperating countries without the defendant's knowledge.
The asset freezing and confiscation in the Chen Zhi case is a perfect example of this procedure. After obtaining preliminary evidence, the US quickly initiated a civil confiscation lawsuit, and Chen Zhi's side, for various reasons, failed to mount an effective defense, ultimately leading to the surrender of huge sums of money without a fight. IV. A Tight Legal Net and a Well-Established System Of course, the U.S. Department of Justice's move is not without legal basis; on the contrary, it relies on a mature and continuously strengthening domestic legal system. The Rape and Corrupt Organizations Investigator Act (RICO) was originally intended to combat organized crime such as the Mafia, but its scope of application is extremely broad. It applies as long as it can be proven that a criminal organization with the characteristics of a "corporation" has carried out at least two legally defined "fraudulent patterns" (such as mail fraud and telecommunications fraud). The RICO Act imposes extremely severe penalties, including hefty fines and asset forfeiture, making it a powerful tool for prosecutors to compel defendants to plead guilty. The Bank Secrecy Act and anti-money laundering regulations require financial institutions to conduct customer due diligence and report suspicious transactions, providing legal safeguards for financial intelligence gathering. The Patriot Act further expands the government's powers in tracking and combating terrorist financing and money laundering, including strengthening cross-border financial oversight.
Civil Confiscation Related Laws: As mentioned above, this is a direct legal tool.
Through the combined application of these laws, the U.S. Department of Justice has constructed a formally complete legal basis for its actions, although its substantive extraterritorial applicability has been widely criticized by the international community.
V. Technical Analysis and Integrated Application
In this case, the investigating authorities almost certainly used the most cutting-edge technical investigative methods, especially targeting potential cryptocurrency money laundering. As criminal methods become more sophisticated, Chen Zhi's team may attempt to use cryptocurrencies such as Bitcoin and Tether for asset transfers, believing they offer anonymity. However, US law enforcement agencies, such as the FBI and HSI, are already equipped with powerful blockchain analysis tools (such as Chainalysis and CipherTrace). These tools are capable of: Address clustering, which involves grouping multiple cryptocurrency addresses belonging to the same entity by analyzing publicly available blockchain ledgers; Transaction graph mapping, which clearly depicts the complete path of funds from illicit sources (such as darknet markets and fraudulent platforms) to exchanges, then to coin mixing services, and finally to withdrawal or conversion into other assets; and Identity identification, which involves... By partnering with compliant cryptocurrency exchanges, anonymous addresses on the blockchain are linked to real-world personal identification information. Therefore, attempts to launder money through cryptocurrency may leave behind immutable and extremely clear electronic traces in the face of modern investigative techniques. This may have been the final technological straw that broke Chen Zhi's team. VI. Industry Impact and Polarized Reactions The outcome of the Chen Zhi case undoubtedly sent shockwaves around the world, with far-reaching impact and polarized opinions. Some consider it a "classic case." First, it serves as a powerful deterrent to transnational crime. This case sends a clear signal to money launderers, fraudsters, and corrupt officials worldwide: wherever your criminal activities occur, if your funds are linked to the US financial system, you may face the risk of being "uprooted." This significantly increases the cost and risk of global crime. Second, it raises the standard of law enforcement cooperation. It demonstrates how to effectively combat highly covert transnational financial crimes through high-tech means and a multilateral legal framework, providing a valuable model for other countries. Third, will it become a "shortcut" to asset recovery? For victimized countries of upstream crimes (such as the main victims of telecom fraud in this case, who are primarily in China), despite the controversial process, the outcome is that a portion of the stolen wealth is ultimately contained, achieving a kind of "alternative justice." However, this could also set a bad precedent. Firstly, it constitutes an abuse of "long-arm jurisdiction." This case extends the effect of US domestic law infinitely overseas, essentially judicializing its financial hegemony. Any country whose citizens or businesses have even the slightest connection to the US in their financial transactions could become a target of US justice. This seriously infringes upon the sovereignty and judicial independence of other countries. Second, the "predatory" nature of the civil confiscation system: This system has been heavily criticized for its "presumption of guilt" and procedural asymmetry. It grants the government excessive power, allowing it to deprive citizens of their property without criminal trial, making it highly susceptible to abuse as a tool for government revenue generation. The Chen Zhi case undoubtedly reinforces international concerns about this. Third, the risk of using it as a geopolitical tool: Against the backdrop of escalating strategic competition between China and the US, such cases are difficult to completely escape political interpretation. There is reason to suspect that the US might use the same legal tools in the future to target legitimate companies and individuals in countries it considers strategic competitors for non-economic purposes. Fourthly, the turmoil in the global financial order exacerbates the uncertainty of international business activities. Businesses and the wealthy are forced to reassess their cross-border asset allocation and structure, fearing that an unintentional "connection" could turn them into the next "Chen Zhi." The case of Chen Zhi of the Prince Group transferring 15 billion yuan of his assets to the US Department of Justice is a complex and multifaceted issue. From a crime-fighting perspective, it was undoubtedly a technically sophisticated and highly successful law enforcement operation, potentially dismantling the wealth empire of a suspect involved in major financial crimes and his gang—a classic example. However, from the perspective of international law and national sovereignty, it sets a disturbing precedent. It demonstrates how a nation with absolute dominance in finance, technology, and law can transcend traditional territorial boundaries and enforce its laws globally. If this power is left unchecked, it could transform from a tool for maintaining order into a hegemonic force that creates chaos. Ultimately, this case leaves the world with an unresolved question: In an interdependent and competitive world, what kind of global governance order do we truly need? Should we tacitly accept a "world policeman" role played by the strongest power, or should we strive to build an international judicial cooperation system based on equal sovereignty and genuine multilateralism? The answer to the Chen Zhi case is clearly the former. This is precisely the fundamental reason why it is so unsettling and will inevitably resonate for a long time.
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