From Cigars to Crypto: How Chen Zhi Wove a $4 Billion Money Laundering Network Through Lax Currency Exchange Systems

When British and American authorities dismantled the financial empire of Chen Zhi and his Cambodian Prince Group, they uncovered something that shocked the global financial world: a criminal organization had quietly acquired 50% of Habanos, the world’s most prestigious Cuban cigar company. But the cigars were merely the tip of an iceberg. Below the surface lay an intricate web of offshore shell companies, cryptocurrency mining operations, underground gambling platforms, and deliberately exploited lax currency exchange systems that together processed billions in illicit funds across three continents.

This wasn’t traditional money laundering. This was something far more sophisticated—a hybrid model that Chen Zhi and his associates engineered to weaponize every financial loophole available in Southeast Asia and beyond.

Spider Web 2.0: The New Architecture of Offshore Crime

The system Chen Zhi built represents what analysts are now calling “Spider Web Capitalism 2.0”—an evolution of traditional offshore finance supercharged by blockchain technology and deliberately positioned in jurisdictions with weak regulatory frameworks.

Traditional offshore capitalism has always relied on a simple premise: move money through tax havens and opacity. The wealthy used Swiss banks, Cayman Islands trusts, and shell companies to hide assets from their home governments. But this system had a fatal flaw: it depended on intermediaries. Banks processed transfers. Lawyers drafted documents. Money always had to move through some officially recorded channel, leaving traces.

Chen Zhi’s network inverted this model. By combining three elements—traditional offshore financial structures, peer-to-peer cryptocurrency transfers, and Southeast Asia’s uniquely permissive regulatory environment—his organization created something that operated in the gaps between jurisdictions, the blind spots between systems.

The mathematical elegance of the model was undeniable. A cryptocurrency wallet requires no intermediary approval. Funds can move globally in minutes without banking relationships. Bitcoin mined legitimately derives its “legality” from the mining process itself, not its source. And in Southeast Asia, particularly Cambodia, with its lax currency exchange controls and political tolerance for foreign financial operations, the entire system could function almost openly.

“This region possesses the fertile ground for traditional offshore finance—weak foreign exchange controls, underdeveloped financial oversight, and abundant corruption—while simultaneously providing safe harbor for emerging technologies like cryptocurrencies,” one financial analyst noted of Southeast Asia’s role. The region had become a proving ground. A sandbox where capital forces could experiment boldly, circulating gray money digitally across borders.

Building the Spider: Chen Zhi’s Global Network of 128 Companies

According to investigations by Singapore’s Lianhe Zaobao and international law enforcement, Chen Zhi controlled or influenced at least 128 companies globally. Seventeen were registered in Singapore alone. On paper, they declared legitimate business activities: investment consulting, real estate development, intermediary services, electromechanical engineering. In reality, most were shell entities—structures designed to obscure ownership and transaction flows.

The complexity was intentional. Many companies employed what investigators called a “multiple names in multiple locations” strategy. Entities with names like Alphaconnect, Greenbay, Binary, and Drew appeared simultaneously in the registers of Singapore and Taiwan. In early 2019, four companies with virtually identical names were established almost simultaneously in different jurisdictions, all nominally controlled by Singaporean citizen Lim Zhongliang—a name that conveniently did not appear on any sanctions lists.

These companies declared business activities spanning investment consulting and international trade. But they exploited a critical regulatory gap: Singapore’s exempted private companies require no more than 20 shareholders and are exempt from institutional shareholder disclosure requirements. Through this structure, Chen Zhi could maintain hidden ultimate beneficial ownership while maintaining legal plausibility.

The real innovation, however, came in Hong Kong. Between 2017 and 2019, Chen Zhi orchestrated a strategy of acquiring major stakes in Hong Kong-listed companies—effectively giving himself access to Asia’s premier capital markets and the legitimacy that public listing provides.

Zhihaoda Holdings (1707.HK): Originally a Hong Kong-based engineering contractor that went public in October 2017. Less than a year later, in December 2018, original shareholders abruptly sold their entire stake to Chen Zhi, making him controlling shareholder with 54.79% ownership. He immediately installed his confidant Qiu Dong, a senior Prince Group executive, to the board. The company then began what insiders called its “Cambodia-ization”—expanding from engineering into Cambodian real estate development and eventually luxury goods sales by 2023.

Kun Group Holdings (924.HK): A Singapore-based electromechanical engineering company registered in the Cayman Islands and listed in Hong Kong in July 2019. In January 2023, the founding Hong family sold all shares to Chen Zhi, who acquired 55% controlling interest. Though Chen Zhi held no official director position, the behind-the-scenes financial control was absolute.

In Hong Kong overall, Chen Zhi directly or indirectly controlled at least 10 additional companies beyond these two listed entities. Most served holding and investment functions. One particularly important operation was Hing Seng Ltd., a shell company that functioned essentially as Chen Zhi’s personal underground bank.

Documents revealed in US Department of Justice filings showed that between November 2022 and March 2023 alone—a period of just four months—Hing Seng transferred approximately $60 million to an affiliated cryptocurrency mining company in Laos controlled by the Prince Group. These mining operation funds subsequently flowed to accounts that purchased luxury consumption items for Prince Group executives’ spouses: Rolex watches, Picasso paintings, and jewelry. The sole shareholder and director of Hing Seng, Sun Weiqiang, was registered with a mainland China identity but had no publicly available business history and appeared on no sanctions list. He was, in essence, an invisible intermediary.

These Hong Kong shell companies served a crucial function: they created the appearance of legitimate international business while actually functioning as transaction conduits for illicit wealth. Hong Kong, as a free financial center with its own currency system and relative autonomy in foreign exchange matters, provided the perfect environment for this operation.

Gaming Casinos and Currency Loopholes: The Primary Laundering Channels

Cambodia’s gambling industry became central to the operation. The Prince Group controlled numerous casino hotels in Sihanoukville and operated digital gambling platforms registered overseas, recruiting Chinese gamblers through websites and mobile applications. Chinese courts determined that Prince Group generated over ¥5 billion ($690 million equivalent) in revenue through illegal online gambling operations.

But gambling served a secondary function beyond direct revenue generation. It provided a perfect mechanism for mixing illicit funds with legitimate cash flows. The highly anonymous nature of chip transactions and the cross-border movement of gambling funds meant that illicit proceeds could be obscured within the normal operations of gaming platforms.

Parallel to these operations, the Prince Group controlled the Golden Fortune Technology Park in the Cambodia-China border region—which was functionally an online casino and fraud center. US prosecutors documented that fraudulent proceeds from the Prince Group’s criminal activities were systematically laundered through these gambling operations before flowing into supposedly legitimate accounts.

But the single most critical channel for global financial flows was Huione Group, a fintech company claiming to provide electronic payment services through a platform called HuionePay. Huione’s founder was a former financial manager working under Chen Zhi himself during his earlier operations, maintaining close operational ties to the Prince Group leadership.

Between August 2021 and January 2025, according to FinCEN’s Financial Crimes Enforcement Network analysis, Huione Group facilitated the laundering of at least $4 billion in illicit funds. This included approximately $37 million stolen by North Korean state-sponsored hackers, $36 million from cryptocurrency investment fraud schemes, and roughly $300 million from other cybercrime operations targeting Southeast Asian victims.

Huione operated what cybersecurity analysts called a “one-stop crime platform” on the Telegram messaging service. According to research by US blockchain analytics firm Elliptic, Huione had aggregated black market merchants within its network—individuals and entities openly selling malware, stolen personal data, and money laundering services, primarily serving Southeast Asian cryptocurrency scam networks.

The infrastructure supporting this platform—the lax currency exchange systems, the weak Know Your Customer (KYC) requirements in frontier markets, the tolerance for high-volume suspicious transactions—made it possible. Multiple financial institutions processed transactions that should have triggered immediate regulatory alerts. The system worked because the system itself had been engineered to look the other way.

The HSBC Connection: In 2015, Telegram had already banned all channels related to HSBC due to the platform’s notorious reputation for money laundering activity. When the US-UK crackdown came, FinCEN directly identified HSBC Group as a key hub in the Prince Group’s money laundering network.

Following the publication of sanctions notices, the US government invoked Section 311 of the Patriot Act to effectively sever HSBC from the US dollar system. All US financial institutions were prohibited from opening or maintaining accounts for HSBC. The directive was unambiguous: this entity was now radioactive.

The response was immediate and visceral. Large numbers of Cambodians who held accounts or funds with HSBC rushed to currency exchange points, desperately converting electronic balances to cash—often accepting a 10% haircut just to escape as quickly as possible. The panic reflected a universal truth: when regulatory oversight suddenly tightens, the alternative financial infrastructure that relied on lax currency exchange protocols collapses overnight.

The Bitcoin Solution: Converting Criminality into Cryptocurrency

The most sophisticated element of Chen Zhi’s operation was his use of Bitcoin mining as a money laundering methodology. The indictment reveals that he invested massive sums—obtained through fraud, cybercrime, and coercion—into cryptocurrency mining operations under his control.

The logic was elegant. Bitcoin mining requires massive computational power but produces new coins that, by definition, have no traceable criminal history. They are derived from blockchain consensus rewards, not from criminal proceeds. A Bitcoin mined is a Bitcoin born clean, with zero forensic connection to illicit activity.

In this seemingly legitimate mining process, original criminal funds were transformed into “laundered” digital assets. The paper trail ended. The criminal provenance was severed. The blockchain itself—designed to be permanently immutable and transparent—had become a tool for opacity.

Investigators traced investments flowing from shell companies through the Laos-based mining operations, generating new Bitcoin holdings that were subsequently moved to anonymous wallet addresses. By fragmenting the illicit funds into thousands of wallet addresses, Chen Zhi’s network created a computational challenge for law enforcement. Tracing $4 billion in Bitcoin spread across 10,000+ anonymous addresses requires far more resources than traditional asset tracking.

The Habanos Revelation: Infiltrating Legitimate Industries

The acquisition of Habanos SA represented a watershed moment in the investigation. In 2020, Imperial Brands, the British tobacco multinational, announced it was divesting its premium cigar business—including its 50% stake in Habanos SA, the cigar monopoly jointly held by the Cuban government and Spain since 1994.

Chen Zhi’s Hong Kong-registered company, Allied Cigar Corporation, acquired this stake for €1.04 billion ($1.15 billion USD equivalent).

What followed was a dizzying series of corporate maneuvers designed to obscure beneficial ownership. Within months, the shares transferred from Allied Cigar Corporation to Allied Cigar Fund LP, registered in the Cayman Islands. The company was renamed Instant Alliance Ltd., then restructured again. The shares transferred to an individual named Zhang Pingshun. Finally, the company was dissolved entirely in June 2021.

This shell game succeeded in creating sufficient corporate opacity that the true beneficial owner remained obscure for years. It took Swedish law enforcement stumbling upon documentation during an unrelated cigar smuggling investigation to break the pattern.

In late 2023, Gothenburg police obtained operational documents (file number MKN-2025–5445) during investigations into illicit cigar trafficking. The Swedish cigar publication Cigar World obtained copies of the police report, which revealed that Chen Zhi—through multiple layers of intermediary companies including Asia Uni Corporation Ltd., a Hong Kong entity—indirectly controlled 50% of the world’s most prestigious cigar company.

The implications were staggering. Habanos held exclusive global distribution rights for premium Cuban cigar brands. China represented its largest consumer market. Through this single corporate maneuver, Chen Zhi had gained influence over a crucial luxury goods distribution channel—effectively creating another mechanism for converting illicit digital funds into physically exportable high-value assets.

The Global Crackdown: When the Spider Web Tears

The coordinated action by American and British authorities marked the beginning of the network’s dismantling. The US Department of Justice issued an arrest warrant for Chen Zhi and initiated civil asset forfeiture proceedings against his holdings in American jurisdictions. The UK began freezing properties awaiting court-ordered confiscation.

Cambodian authorities, under international pressure, expressed willingness to cooperate with foreign law enforcement investigations. However, as of the time of reporting, the Cambodian government has taken no direct action against Chen Zhi personally, and the domestic operations of the Prince Group remained apparently largely unaffected—a detail suggesting continued political protection or deliberate regulatory forbearance.

The Prince Group issued public denials, claiming that criminals had “misappropriated the name” and that the organization bore no responsibility for alleged activities. Several Prince Group executives made transparent attempts to distance their companies from Chen Zhi, with at least one Hong Kong-listed entity hastily issuing clarifications about “separation from Chen Zhi.”

Nevertheless, Hong Kong police announced the freezing of assets totaling HK$2.75 billion ($353 million USD equivalent) belonging to an unnamed group suspected of international telecommunications fraud and money laundering. This group was understood to be connected to Chen Zhi. Police stated they believed the frozen assets—consisting of cash, securities, mutual funds, and other holdings—represented proceeds of crime.

The US also seized substantial Bitcoin holdings linked to Chen Zhi’s network, though the exact quantity has not been fully disclosed. Combined with UK and Hong Kong asset freezes, the total value of seized assets approached an estimated $3-4 billion.

The Architecture Exposed: How Lax Currency Exchange Enabled Billions

What the investigations ultimately revealed was the critical role that lax currency exchange systems played in enabling the entire operation.

In traditional international business, currency exchange is heavily regulated. Transactions above certain thresholds trigger reporting requirements. Foreign exchange dealers maintain records. Banking relationships create audit trails. Legitimate cross-border movement of large sums requires documentation, verification, and regulatory compliance.

Southeast Asia’s patchwork of lax currency exchange protocols—particularly in Cambodia, Myanmar, and other regional centers—created systematic gaps. Currency exchange operators with minimal KYC procedures, informal money transfer systems (hawala-like networks), and regulatory environments more focused on political stability than financial crime prevention enabled the Prince Group to move value across borders with minimal detection risk.

A businessman with $100,000 in cryptocurrency could convert to fiat through peer-to-peer exchanges. Move to an airport in Phnom Penh. Exchange the fiat into another currency through a money dealer requiring minimal documentation. Wire it to Hong Kong through a correspondent bank. From there, it could flow into shell company accounts, real estate purchases, or luxury goods acquisitions.

The system worked because each transaction individually appeared legitimate. The aggregate flow pattern—which would reveal obvious money laundering—was invisible to authorities because it was distributed across numerous small transactions and multiple jurisdictions.

Blockchain Transparency vs. Digital Shadows: The Future of Financial Crime

The ultimate irony embedded in the Chen Zhi case is this: the technology designed to create permanent, transparent, auditable financial records—blockchain technology—became a tool for opacity when combined with procedural anonymity and regulatory arbitrage.

Yet this advantage is likely temporary. As investigators deployed blockchain analytics tools, they were able to trace transaction flows across the network with precision that would have been impossible in traditional offshore finance. The permanent record that Chen Zhi hoped would conceal criminal origins through legitimacy eventually made the full scope of his operation visible to authorities.

Moving forward, the case demonstrates both the capability and the necessity of enhanced international cooperation on financial crime. The US-UK coordination in this investigation, the involvement of Swedish law enforcement, and the blockchain analytics conducted by private firms like Elliptic showcase an emerging architecture for detecting and disrupting next-generation money laundering schemes.

The 21st-century offshore capitalist dreaming of replicating Chen Zhi’s success may find the window rapidly closing. Regulatory agencies worldwide are implementing enhanced sanctions screening, improving currency exchange monitoring, and developing blockchain surveillance capabilities specifically designed to detect the kinds of fund flows that characterized the Prince Group’s operations.

Behind the €1.04 billion Habanos acquisition, the $4 billion in laundered funds, and the tens of thousands of seized Bitcoin wallets lies a fundamental question: Can the decentralized, pseudonymous architecture of blockchain finance coexist with effective regulatory oversight? Or will the transparency inherent to on-chain activity ultimately render digital opacity impossible?

The dismantling of Chen Zhi’s web suggests that the answer is becoming clear. The Spider Web may have woven itself sophisticated enough to evade detection for years. But the very threads that created the web—the blockchain transaction records, the shell company documents, the banking relationships—ultimately provided the map by which authorities hunted it down.

In the end, it’s not the technology that failed to contain crime. It’s the faith in regulatory laxity that proved most fragile.