The case of a mysterious 2012 bitcoin heist is closed. The Department of Justice on Friday seized $3.36 billion in cryptocurrency from a Georgia man who pleaded guilty to wire fraud, the agency said Monday. He faces up to 20 years in prison.
Authorities say that James Zhong, 32, stole approximately 50,000 bitcoin from the Silk Road marketplace in September 2012. Zhong was accused of setting up numerous accounts on Silk Road, depositing small amounts of bitcoin, then executing multiple withdrawals in the same second. This tricked the system into giving him significantly more bitcoin than he deposited. He then transferred the bitcoin to a variety of accounts in an attempt to conceal his identity and the source of the cryptocurrency, according to the US Attorney’s Office for the Southern District of New York.
IRS agents issued a search warrant for his house in November 2021 and found the majority of the stolen bitcoin hidden in devices in an underground floor safe, the Justice Department said. There were also large amounts of bitcoin found on a single-board computer, which was discovered stashed under blankets in a popcorn tin stored in a bathroom closet, it noted in a release.
Zhong began to cooperate with authorities this past March, when he voluntarily surrendered over a thousand additional bitcoin. He is scheduled to be sentenced on Feb. 22.
Silk Road was a black market that functioned on the dark web from 2011 to 2013. Its founder, Ross Ulbricht, was convicted in 2015 of seven charges related to the activity of Silk Road. These included conspiracy to traffic narcotics, money laundering and conspiracy to commit computer hacking. He was sentenced to life in prison.
