After a decade of hunting, the Justice Department has made its second-largest cryptocurrency seizure ever, seizing over 51,680 Bitcoin.
Previously, the digital tokens were in the hands of James Zhong, who pleaded guilty to stealing them from The Silk Roada once infamous dark website that was known as the “Amazon of drugs” for their access to illegal drugs, weapons and services. While there is no love lost between law enforcement officials and that site, Zhong’s theft of Bitcoin was no less criminal.
Officials found the Bitcoin after serving a search warrant at Zhong’s home in Gainesville, Georgia. A “single board computer” was found hidden in a popcorn tin in a bathroom cabinet containing the digital tokens.
“James Zhong committed wire fraud more than a decade ago when he stole approximately 50,000 Bitcoin from the Silk Road,” US Attorney Damian Williams said. in a sentence this week. “For almost 10 years, the whereabouts of this huge chunk of missing Bitcoin had remained a mystery of more than $3.3 billion. Thanks to state-of-the-art cryptocurrency tracking and good old-fashioned police work, the police located and recovered this impressive stash of proceeds of crime.”
On that dollar figure: Bitcoin was seized on November 1. 9, 2021, Justice Department officials say. At the time, it was worth $3.36 billion. Bitcoin, however, has fell precipitously Since then, and as of Tuesday morning, the seized Bitcoin was worth just over $1 billion.
The Department of Justice in 2017 sold out another Bitcoin taken directly from Silk Road for just over $48 million.
Justice Department officials say Zhong registered nine fake accounts on Silk Road in September 2012, depositing between 200 and 2,000 Bitcoin into the account. He would then flood the site with withdrawal requests (up to five per second), which tricked the site into giving him multiples of what he had deposited. After doing this 140 times, he withdrew all cryptocurrency holdings from the site.
Zhong also lost $662,000 in cash, physical Bitcoin coins, an 80% stake in a Memphis-based real estate investment firm with substantial holdings, and more.
He faces up to 20 years in prison.
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