The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on Cambodian businessman Ly Yong Phat due to his involvement in cyber-scam operations that exploited trafficked individuals for cryptocurrency fraud schemes.
In a press release dated September 12, the OFAC noted that Phat, who also serves as a senator in Cambodia, along with his business conglomerate L.Y.P. Group and related entities, is implicated in egregious human rights violations that forced trafficked workers to engage in online scams. These fraudulent operations typically aimed to persuade victims to invest in fictitious cryptocurrency ventures or fake foreign exchange trades, leading to substantial financial losses.
Surge in Crypto Scams in Asia
The OFAC referenced findings from the Financial Crimes Enforcement Network and the FBI’s Internet Crime Complaint Center, which highlighted a sharp rise in losses attributed to investment fraud that often exploits the excitement surrounding cryptocurrencies. In 2023 alone, losses from cryptocurrency investment fraud skyrocketed to $3.96 billion, with many of these scams being executed by criminal organizations based in Southeast Asia, including those tied to the O-Smach Resort and other businesses linked to Phat.
The regulator has alleged that many individuals orchestrating these scams were, in fact, victims of human trafficking themselves. Lured by false promises of employment, these individuals were drawn to the O-Smach Resort and other locations in Cambodia associated with Phat. Upon arrival, their phones and passports were confiscated, leaving them with no means of escape and compelling them to participate in crypto-related scams.
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The trafficked individuals faced severe physical and psychological abuse, including beatings, electric shocks, and threats of being sold into even more exploitative circumstances, effectively rendering them both victims and perpetrators. As noted in the press release, local authorities have successfully rescued individuals of various nationalities, including those from China, India, Indonesia, Malaysia, Singapore, Thailand, and Vietnam.
As a result of the sanctions, Phat and his associated entities have been severed from the U.S. financial system, with their assets frozen and any transactions with them by U.S. residents strictly prohibited. These sanctions also extend to any businesses that are 50% or more owned by Phat or his affiliates, putting severe penalties in place for any violations.
Wider Context: From Cambodia to Laos
This incident is not an isolated case. As reported by crypto.news, a 2023 investigation conducted by Bloomberg journalist Zeke Faux unveiled a similar network operating in Cambodia and Myanmar, run by Chinese criminal groups. In addition, the Indian Embassy in Laos recently rescued 14 Indian youths from comparable cyber-scam operations within the Golden Triangle Special Economic Zone, where they had been trafficked and coerced into participating in cryptocurrency scams.
A report by the FBI in 2023 cautioned that criminals often employ fake job advertisements on social media—ranging from tech support and call center positions to beauty salon roles—to entice victims into these illicit operations.
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