US sanctions Cambodian senator involved in crypto-related human trafficking scams

The U.S. Treasury Department’s Office of Foreign Assets Control has imposed sanctions on Cambodian businessman Ly Yong Phat for his role in operating cyber-scams using illegal workers to commit cryptocurrency fraud.

In a press release issued on September 12, Phat, who is also a Cambodian senator, stated that his conglomerate LYP Group and its affiliates were involved in serious human rights violations related to forcing trafficked workers to participate in online fraud operations.

These scams typically focus on convincing targets to invest in fake cryptocurrency schemes or fraudulent currency transactions, often resulting in significant losses.

Cryptocurrency scams on the rise in Asia

OFAC cited reports from the Financial Crimes Enforcement Network and the FBI’s Internet Crime Complaint Center, noting a significant increase in losses from investment scams capitalizing on the hype around cryptocurrencies.

In 2023 alone, cryptocurrency investment scam losses rose to $3.96 billion. These schemes are run primarily by criminal organizations based in Southeast Asia, including those with ties to O-Smach Resort and other entities controlled by Phat.

The regulator claims that many of those running these scams are actually victims of human trafficking. Lured by false promises of employment, they are lured to the O-Smach Resort in Phat, Cambodia, and other sites. When they arrive, their phones and passports are confiscated, their chances of escape are taken away, and they are forced to commit crypto-related scams.

These abductees were subjected to severe physical and psychological abuse, including beatings, electric shocks, and threats of being sold into situations where they would be further exploited, making them both victims and perpetrators.

The press release said local authorities managed to rescue victims of various nationalities, including China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam.

Phat and his affiliates have been removed from the U.S. financial system, their assets frozen, and U.S. residents banned from all transactions with them. These sanctions also apply to any business in which Phat or his affiliates own 50% or more, and impose severe penalties for anyone found to be in violation of these rules.

From Cambodia to Laos

But this incident is not an isolated one. As Crypto.news reported, Bloomberg journalist Zeke Faux’s investigation in 2023 uncovered a similar network in Cambodia and Myanmar operated by Chinese gangsters.

Similarly, the Indian Embassy in Laos recently rescued 14 Indian youth who were subjected to similar cyber fraud operations in the Golden Triangle Special Economic Zone and forced into cryptocurrency-related scams.

A 2023 FBI report warned that criminals were using fake job postings on social media to lure victims into these operations, ranging from tech support to call center positions to beauty salon positions.