Federal judge blocks nine fraud victims from contesting 127,271 Bitcoin seizure

A federal judge has shut nine alleged fraud victims out of the fight over roughly 127,271 Bitcoin seized from a Cambodian scam network, ruling they never showed a legal claim to the specific coins. The decision does not end their hope of recovery, but it pushes them toward a narrower, discretionary path that could leave them with far less than what they lost.

• Judge Rachel P. Kovner struck the timely claims of Ath Leepinyo and Connie Wilson for lacking Article III standing.
• Seven other claimants, including Lawrence D. Van Dyn Hoven, were denied permission to file late claims to the wallets.
• The underlying forfeiture complaint, filed October 14, 2025, targets Bitcoin the Justice Department valued at roughly $15 billion at the time.

• 127,271 Bitcoin seized from wallets linked to Chen Zhi, DOJ’s largest forfeiture target
• $15B value DOJ assigned the Bitcoin when it filed the forfeiture complaint in October 2025
• 9 fraud victims whose standing to contest the forfeiture was rejected by Judge Kovner
• 250+ victims identified in a Brooklyn-based laundering network tied to the scheme

Judge Rachel P. Kovner of the Eastern District of New York rejected claims from nine alleged fraud victims seeking to contest the forfeiture of approximately 127,271 Bitcoin, according to reporting by CryptoSlate. Her Friday (September 25, 2025) order found that none of the nine plausibly connected their stolen funds to the specific seized wallets, the legal threshold needed to establish Article III standing in a civil forfeiture case.

Kovner struck the timely claims of Ath Leepinyo and Connie Wilson. She separately denied seven other claimants, including Lawrence D. Van Dyn Hoven, permission to file late.

Kovner finds nine claimants were at best unsecured creditors

The court treated the claimants’ allegations as establishing, at most, the position of general unsecured creditors, meaning people seeking compensation without a qualifying ownership interest in the particular assets being forfeited. A loss tied to an alleged fraud, the order found, does not by itself establish ownership of coins sitting in these specific wallets.

Kovner acknowledged that a constructive trust could in theory give a claimant an equitable ownership interest sufficient for standing, since that remedy can recognize an interest in property derived from a person’s own assets. But she found none of the nine plausibly alleged the factual link needed to draw that connection here.

Van Dyn Hoven, for example, relied on an investigator’s belief that his stolen cryptocurrency was part of the seizure. Kovner found his filings offered no supporting facts explaining that belief.

DOJ’s $15 billion complaint accuses Chen Zhi of running forced-labor scam compounds

The case traces back to an October 14, 2025 civil forfeiture complaint and an indictment, both filed in Brooklyn federal court, that the Justice Department called the largest forfeiture action in its history. Prosecutors charged Chen Zhi, also known as Vincent, the 37-year-old founder and chairman of Prince Holding Group, with wire fraud conspiracy and money laundering conspiracy. Zhi remains at large.

DOJ alleges Prince Group, a conglomerate operating in more than 30 countries, ran forced-labor scam compounds across Cambodia where trafficked workers were made to carry out “pig butchering” investment fraud schemes under threat of violence. One network tied to the operation worked out of Brooklyn and helped launder funds from more than 250 victims in New York and across the country.

Prince Group’s investment scams have caused billions of dollars in losses and untold misery to victims around the world, including here in New York, on the backs of individuals who have been trafficked and forced to work against their will.

Joseph Nocella Jr., U.S. Attorney for the Eastern District of New York

The $15 billion valuation reflects the Bitcoin’s worth when DOJ filed the complaint, not its current market price, and the allegations against Chen Zhi remain unproven pending trial. No defense response to the indictment appears in the reporting or court filings reviewed.

Remission under 28 CFR 9.8 is the only route left for rejected claimants

Kovner’s order pointed rejected claimants toward victim remission if the government ultimately wins forfeiture. That process, governed by 28 CFR 9.8, lets eligible victims petition DOJ for recovery from forfeited property even without a present ownership interest in the specific assets seized.

Petitioners must document a specific financial loss directly caused by the offense, show they did not knowingly participate in or benefit from it, and prove they lack reasonably available alternative assets for recovery. Remission is capped at a victim’s proportionate share of net forfeiture proceeds, so the scale of the $15 billion seizure carries no guarantee of full repayment if the pool of recognized claims grows large.

The September 25 order, entered in the docket for the underlying civil forfeiture case, resolves only these nine claimants’ standing. It neither finalizes the forfeiture nor moves the Bitcoin into any distribution reserve.

The BlockWest read. The ruling sets a template other mega-scale crypto forfeiture cases will likely follow: victims cannot simply point to a large seizure and claim a piece of it, even with billions at stake. For anyone defrauded in a comparable scheme, the practical path now runs through a discretionary DOJ petition with a documentation burden and a proportional cap, not a direct courtroom claim to specific wallets.

The forfeiture case over the Bitcoin proceeds with no competing ownership claims from the nine rejected claimants, while prosecutors have not disclosed a trial timeline for Chen Zhi, who remains at large. Whether any of the nine, or other victims identified in the Brooklyn network, ultimately recover funds now depends on the government winning the forfeiture action and on separate, discretionary remission decisions under 28 CFR 9.8.

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