According to a Sept. 12 press release, Phat, who is also a Cambodian senator, and his conglomerate L.Y.P. The Group and associated entities have been involved in serious human rights violations involving trafficked workers being forced to participate in online fraud operations.

These scams often focused on convincing victims to invest in fake cryptocurrency investments or fraudulent foreign exchange transactions, often resulting in significant financial losses.

Losses from investment scams have increased dramatically, particularly by exploiting the excitement around cryptocurrencies, OFAC said, citing reports from the Financial Crimes Enforcement Network (FinCEN) and the FBI’s Internet Crime Complaint Center.

In 2023 alone, losses from cryptocurrency investment scams reached $3.96 billion. Many of these scams were organized by Southeast Asia-based criminal organizations in conjunction with O-Smach Resort and other entities controlled by Phat.

The regulator claimed that many of those organizing these scams were actually victims of human trafficking. Lured by false promises of employment, people were lured to O-Smach Resort and other Phat-affiliated locations in Cambodia.

Upon arrival, they were stripped of their phones and passports, denying them any chance of escape and forced to run crypto-related scams. These trafficking victims were subjected to severe physical and psychological violence, such as beatings, electric shocks, and threats of being sold into even worse situations, thus becoming both victims and forced labor offenders.

According to the press release, local authorities managed to rescue victims from various nationalities, including China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam.

Phat and its associated entities were completely cut off from the US financial system, their assets were frozen, and US residents were prohibited from making any transactions with these individuals and entities. These sanctions include all businesses in which Phat or its affiliates own at least 50%, and heavy penalties are foreseen for those who violate these rules.

Unfortunately, this incident is not an isolated case. An investigation by Bloomberg journalist Zeke Faux in 2023 revealed the existence of a similar network operated by Chinese gangsters in Cambodia and Myanmar.

Additionally, India’s Embassy in Laos recently rescued 14 Indian youths from similar cyber fraud operations in the Golden Triangle Special Economic Zone; These young people were forced to commit crypto-related fraud.

A 2023 FBI report warned that criminals are luring victims into these operations with fake job postings — such as tech support, call center jobs or beauty salon positions — on social media.