DOJ Seizes $3.36 Billion Worth of Bitcoin
- Silk Road was an online site where people used Bitcoin to purchase illegal items.
- Authorities in the United States are increasingly investigating crypto-related frauds.
The US Department of Justice has announced the seizure of cryptocurrencies worth $3.36 billion. The US Attorney’s Office for the Southern District of New York revealed that the bitcoin was seized from a man who “unlawfully obtained” more than 50,000 bitcoins from the now-extinct dark-web market, Silk Road, about a decade ago. Law enforcement agents seized the bitcoins from the home of James Zhong in November 2021 in the state of Georgia.
Zhong’s method, according to the Justice Department, consisted of setting up nine identities on the Silk Road marketplace to hide his identity and launching more than 140 transactions to deceive Silk Road’s withdrawal-processing system into sending the BTC. Zhong didn’t conduct any listings or transactions, but was able to create the accounts with “the bare minimum of information.”
The DOJ revealed that Zhong pleaded guilty on November 4 to committing wire fraud in 2012. U.S. Attorney Damian Williams said in a statement,
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.
Authorities discovered the bitcoin on an underground floor, and on a single-board computer that was tucked away under blankets in a popcorn tin kept in a bathroom cupboard. In addition, law enforcement authorities found $661,900 in cash, 25 bitcoin Casascius coins (worth around 174 bitcoin), an extra 11.116 bitcoin, and a few silver and gold-colored bars.
According to attorney Williams, authorities were able to track down the stolen bitcoin thanks to “state-of-the-art cryptocurrency tracing” and “good old-fashioned police work.” The seizure at the time was the largest crypto seizure in the DOJ’s history and is the second-biggest financial seizure the department has recorded.
According to 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.
Silk Road was an online illegal market that was established in 2011 by Ross Ulbricht. The site was well-known for engaging in money-laundering crimes and using bitcoin to buy and sell hard drugs. The U.S. government closed down the site in less than two years.
Ulbricht was later found guilty by a jury and given a life sentence without the chance of parole. Zhong, for his part, faces up to 20 years in jail for wire fraud. His sentencing is expected to take place in February 2023.