By Timothy S. Donahue

Top Takeaways:

• Charges escalate: Chinese authorities have officially arrested Chen Zhi, charging him with intentional injury through cruel means, an offense that can result in penalties ranging from 10 years in prison to death, in addition to a copyright infringement charge.
• Cigar industry ties: Chen is the largest private investor in Habanos S.A., holding an indirect 28.55% stake acquired through the purchase of Imperial Brands’ premium cigar business in 2020.
• Ownership uncertainty: The case increases pressure on ongoing efforts to restructure ownership interests linked to Chen, following sanctions, asset seizures, and liquidation proceedings in multiple jurisdictions.

The largest private shareholder of Habanos S.A. is facing new criminal charges in China, complicating the ownership structure of the Cuban premium cigar company as courts and restructuring officials continue to unwind portions of his international business empire.

Chinese authorities formally arrested Chen Zhi on July 6, charging him with intentional injury by cruel means. This offense carries a potential sentence of 10 years’ imprisonment to the death penalty under Chinese law. Additionally, prosecutors have added a charge of copyright infringement. Chen has remained in custody in China since his detention in Cambodia, where he was subsequently transferred to Chinese authorities in January.

A criminal case has emerged following a wide-ranging indictment unsealed in 2025, which alleges that Chen led a multibillion-dollar criminal enterprise involved in cryptocurrency investment fraud, commonly referred to as “pig butchering.” U.S. authorities also announced what they called the largest bitcoin seizure in the history of the Department of Justice, claiming that these assets were linked to Chen’s organization. Chen has denied any wrongdoing through his representatives in previous proceedings.

Chen’s legal troubles in the premium cigar industry go beyond criminal allegations due to his significant ownership interest in Habanos S.A., Cuba’s exclusive premium cigar export company.

Chen became part of the Habanos ownership structure in 2020 when a consortium acquired Imperial Brands’ premium cigar business for approximately €1.04 billion. This transaction included Tabacalera USA, Altadis U.S.A., JR Cigar, and Imperial’s 50% stake in Habanos S.A.

Recent corporate records reviewed by the Swedish cigar publication Cigarrvärlden reveal that Chen, through a network of holding companies, holds an indirect ownership interest of 28.55% in Habanos S.A. This makes him the largest private shareholder in the company, aside from the Cuban government’s 50% stake.

Following Chen’s indictment in the U.S., authorities in various jurisdictions have taken action against businesses connected to his corporate network. The Eastern Caribbean Supreme Court has appointed the restructuring firm Interpath to manage the liquidation of several companies based in the British Virgin Islands that are associated with Chen. Representatives from Interpath have also taken on governance roles in certain holding companies linked to the Habanos investment.

The ownership dispute has also had operational consequences. Following U.S. sanctions on Chen-linked entities, Tabacalera USA temporarily lost the ability to source cigars from Tabacalera de García and Flor de Copán, two factories partially tied to Chen’s investment network. Shipments resumed earlier this year after U.S. and U.K. authorities issued the necessary licenses.

Tabacalera S.L.U., which oversees the non-Cuban interests in Habanos S.A., has previously expressed its preference to remove Chen from the company’s ownership structure. However, no public transaction to divest his interest has been announced.

The governments taking criminal and sanctions actions against Chen have not claimed any wrongdoing by Habanos S.A., Altadis U.S.A., JR Cigar, Tabacalera de García, Flor de Copán, or other cigar businesses linked to the ownership structure. Instead, the latest charges increase scrutiny on one of the largest ownership stakes in the global premium cigar industry, while restructuring efforts are ongoing.