The US Department of Justice announced that a man from Georgia, James Zhong, has pleaded guilty to wire fraud after stealing more than 50,000 bitcoins from the Silk Road.
Zhong pled guilty to money laundering crimes, he exploited a flaw in the Silk Road that allowed him to withdraw more Bitcoin than he deposited on the dark web marketplace. The man funded nine fraudulent accounts with an initial deposit of 200 to 2,000 bitcoin and then triggered 140 withdrawal transactions in rapid succession.
“JAMES ZHONG pled guilty to committing wire fraud in September 2012 when he unlawfully obtained over 50,000 Bitcoin from the Silk Road dark web internet marketplace. ZHONG pled guilty on Friday, November 4, 2022, before United States District Judge Paul G. Gardephe.” reads the press release published by DoJ. “On November 9, 2021, pursuant to a judicially authorized premises search warrant of ZHONG’s Gainesville, Georgia, house, law enforcement seized approximately 50,676.17851897 Bitcoin, then valued at over $3.36 billion.”
The authorities seized the stolen funds on November 2021, at the time it was the biggest-ever seizure of cryptocurrency. The US authorities are seeking to forfeit, collectively, approximately 51,680.32473733 Bitcoin.
Law enforcement located 50,491.06251844 Bitcoin of the approximately 53,500 Bitcoin Crime Proceeds. The funds were stored in an underground floor safe and on a single-board computer hidden in the Zhong’s house. The police also recovered $661,900 in cash (25 Casascius coins (physical bitcoin)) along with 11.1160005300044 additional Bitcoin, and four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin.
In August 2017, Bitcoin split into two cryptocurrencies, traditional Bitcoin and Bitcoin Cash (“BCH”).
At the time, Zhong received 50,000 Bitcoin cash and the Bitcoin Cash was converted into 3,500 Bitcoins, this means that Zhong totaled 53,500 Bitcoin.
In March 2022, Zhong opted to surrender an additional 825.4 Bitcoins to the authorities, and in May 2022, he provided another 35.5 Bitcoin.
“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.” said U.S. Attorney Damian Williams. “This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”
ZHONG is scheduled to be sentenced on February 22, 2023, at 3:00 p.m.
“ZHONG, 32, of Gainesville, Georgia, and Athens, Georgia, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.” concludes DoJ.
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(SecurityAffairs – hacking, Log4Shell)