U.S. Treasury Department Sanctions Cambodian Senator Ly Yong Phat Over Cryptocurrency Scam Linked to Human Trafficking

On September 12, the U.S. Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on Cambodian Senator Ly Yong Phat for running crypto scam centres using trafficked labour. The investigations uncovered severe human rights abuses, revealing that Phat had trafficked individuals from multiple regions to force them into fraudulent operations.

The OFAC's press release detailed how Phat, along with his conglomerate L.Y.P. Group Co., LTD, and O-Smach Resort, was deeply involved in these exploitative activities. Over the last two years, Phat’s operations have been linked to forced labour within crypto scam centres, leading to significant abuse of trafficked workers.

Crypto Scams and Human Rights Abuses in Cambodian Resorts

O-Smach Resort, owned by L.Y.P. Group, played a central role in these exploitative schemes. Victims reported being lured to the resort with false promises, only to have their phones and passports confiscated upon arrival. Once trapped, they were coerced into participating in crypto scam operations. Accounts of physical abuse, including beatings, electric shocks, and threats, have surfaced. Some victims even attempted suicide by jumping from buildings within the resort.

As the investigation deepened, authorities uncovered the extent of the network, which included additional properties owned by Phat. The Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel were all implicated in facilitating his abusive operations.

related reading：The Terrifying Reality of Crypto Scams Victims Forced into Human Trafficking

U.S. Sanctions Target Crypto Scams and Human Trafficking

The sanctions, led by the U.S. Treasury’s Secretary for Terrorism and Financial Intelligence, Bradley T. Smith, aim to dismantle Phat’s operations. Smith highlighted the U.S. commitment to tackling human trafficking and financial fraud. He stressed that the sanctions are designed to hold perpetrators accountable and to disrupt fraudulent operations that have targeted unsuspecting individuals, including U.S. citizens, through crypto investment scams.

Phat’s network has been operating within a broader web of fictitious identities and sophisticated schemes aimed at deceiving victims into investing in virtual currencies and foreign exchange trades. This follows warnings from the Financial Crimes Enforcement Network (FinCEN) in September 2023, which identified Southeast Asia as a hotspot for crypto scams run by criminal organisations.

OFAC Blocks Assets Linked to Ly Yong Phat

The U.S. sanctions have blocked all property and financial interests tied to Ly Yong Phat and his entities that are within U.S. jurisdiction or under U.S. persons’ control. Any entity owned 50% or more by the sanctioned parties is subject to these restrictions, effectively freezing their financial resources and barring U.S. persons from engaging in any related transactions.

These measures aim to cripple the financial infrastructure of those engaged in human trafficking and crypto fraud, preventing them from leveraging U.S. financial systems to continue their operations.

Cambodian Government's Response

The Cambodian Ministry of Foreign Affairs expressed "deep regret" over the U.S. sanctions. They condemned the actions taken against Ly Yong Phat and his properties, despite their connection to crypto scams and human trafficking. The ministry voiced its disapproval of the U.S. measures, which further entrenched the divide between Cambodian and U.S. authorities on how to handle such matters.

The OFAC’s decision aligns with a broader U.S. crackdown on illicit crypto activities. In March, the Treasury sanctioned a Hezbollah crypto operator involved in terrorist funding, as well as the crypto mixing service Tornado Cash, which North Korea’s Lazarus Group allegedly used to launder over $100 million.