U.S. Sanctions Cambodian Senator Ly Yong Phat for Crypto Scams

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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September 13, 2024

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The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Cambodian Senator Ly Yong Phat on September 12 for running crypto scam centers using trafficked workers.

Investigations revealed that he trafficked people from different regions to force them into fraudulent operations.

Ly Yong Phat’s Crypto Scam Operations Exploited Trafficked Workers

The OFAC’s press release disclosed that Ly Yong Phat, his conglomerate L.Y.P. Group Co., LTD, and O-Smach Resort have been deeply involved in exploiting trafficked workers for forced labor in crypto scam centers.

Over the past two years, Phat and his entities have been linked to severe human rights abuses.

O-Smach Resort, owned by L.Y.P. Group, has been central to these abuses, with reports indicating that workers were lured to the resort under false pretenses.

Upon arrival, their phones and passports were seized, and they were forced to participate in crypto scam operations.

Victims reported physical abuse, including beatings and electric shocks, as well as extortion and threats. Further investigation revealed reports of victims jumping to their deaths from buildings within the resort.

In response to these findings, authorities have taken further action against Phat’s network.

The OFAC’s sanctions also extend to additional Cambodian properties tied to Ly Yong Phat, including Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel, which were used to further entrench his network of exploitation.

Secretary of the Treasury for Terrorism and Financial Intelligence, Bradley T. Smith, stated that the sanctions reflect a strong commitment to combating human trafficking and financial fraud.

Smith further explained that OFAC’s actions intend to hold accountable those involved in such abuses and to disrupt Phat’s operations, which target unsuspecting people, including Americans, through fraudulent investment schemes.

Notably, the OFAC’s decision follows a broader investigation into the use of fictitious identities and elaborate schemes to deceive victims into investing in virtual currencies and over-the-counter (OTC) foreign exchange trades.

A September 2023 alert by the Financial Crimes Enforcement Network (FinCEN) highlighted that these crypto scams are predominantly orchestrated by criminal organizations based in Southeast Asia.

Local authorities in Cambodia have conducted multiple rescue missions at O-Smach Resort, including in October 2022 and March 2023, freeing victims of various nationalities such as Chinese, Indian, Indonesian, Malaysian, Singaporean, Thai, and Vietnamese.

U.S. Freezes Assets of Ly Yong Phat and Affiliates

OFAC has publicly noted that the sanction against Ly Yong Phat blocks all property and interests in property of him and his entities that are within the United States or under the control of U.S. persons.

Any entities that are 50% or more owned, directly or indirectly, by the sanctioned parties are also subject to these restrictions.

As a result of these sanctions, U.S. persons are prohibited from engaging in transactions involving any assets or interests of the blocked persons or entities, unless specifically authorized by OFAC or exempted.

This measure seeks to cut off the financial resources of those involved in human trafficking and financial fraud, preventing them from operating within or affecting U.S. financial systems.

Meanwhile, the Cambodian Ministry of Foreign Affairs expressed “deep regret” over the U.S. Treasury’s sanctions.

The ministry condemned the measures and criticized the sanctions imposed on Phat’s properties, which have been associated with crypto scams linked to human trafficking and forced criminality.

Notably, OFAC has imposed sanctions on persons and business entities using crypto for illicit transactions. In March, the U.S. Treasury sanctioned a Hezbollah crypto operator linked to terrorist funding.

The authority also sanctioned crypto mixing service Tornado Cash, claiming that North Korea’s Lazarus Group has used the service to launder more than $100 million stolen in crypto scams.