US Announces ‘Historic $3.36 Billion Cryptocurrency Seizure’ as Silk Road Bitcoin Thief Pleads Guilty

The man who stole more than 50,000 bitcoins from the Silk Road market has pleaded guilty. According to the U.S. Department of Justice, “the seizure was then the largest cryptocurrency seizure” in DOJ history and “remains the second-largest financial seizure ever by the department.”

Silk Road exploiter pleads guilty

The US Department of Justice (DOJ) announced on Monday that James Zhong pleaded guilty on Friday “to committing wire fraud in September 2012 when he illegally obtained more than 50,000 bitcoins from Silk’s dark web internet marketplace. Road”. The Justice Department also announced a “historic $3.36 billion cryptocurrency seizure” in the case.

The DOJ explained that law enforcement raided Zhong’s home in Gainesville, Georgia on Nov. 9, 2021, and “seized approximately 50,676.17851897 bitcoins, then valued at more than $3.36 billion. dollars”, specifying:

This seizure was then the largest cryptocurrency seizure in the history of the US Department of Justice and today remains the second largest financial seizure ever by the department.

Zhong also had about 3,500 additional bitcoins exchanged for BTC over 50,000 bitcoins cash (BCH) that he received following the hard fork of the bitcoin blockchain in August 2017. He used a cryptocurrency exchange to l stranger for conversion.

Besides the BTC seized from his home, Zhong began “voluntarily surrendering additional bitcoins to the government” from March this year, the DOJ revealed, adding that “in total, Zhong voluntarily surrendered 1,004.14621836 bitcoins additional”.

US Announces 'Historic $3.36 Billion Cryptocurrency Seizure' as Silk Road Bitcoin Thief Pleads Guilty

The government is seeking the confiscation of “approximately 51,680.32473733 bitcoins,” the DOJ noted. At the time of writing, BTC is trading at $20,641.28, so the amount the government is looking for is around $1.07 billion.

Zhong’s Scheme to Defraud the Silk Road Market

Zhong executed a scheme to defraud the Silk Road market of his money and assets in September 2012, the DOJ said, adding that he “was able to withdraw far more bitcoin from Silk Road than he had filed first”. For example, the Department of Justice clarified that on September 19, 2012:

Zhong deposited 500 bitcoins in a Silk Road wallet. Less than five seconds after making the initial deposit, Zhong executed five withdrawals of 500 bitcoins in quick succession – that is, within the same second – resulting in a net gain of 2,000 bitcoins.

On Monday, the U.S. government filed an amended preliminary order of forfeiture in the case United States v. Ross Ulbricht “seeking to confiscate approximately 51,351.89785803 traceable bitcoins at Silk Road, worth approximately 3,388,817,011, $90 at time of seizure”. Silk Road founder Ross Ulbricht was convicted in 2015 and is currently serving a double life sentence plus 40 years without parole.

U.S. District Judge Paul Gardephe also issued a preliminary consent forfeiture order on Friday for 154.4268793000044 BTC, $661,900 in cash, 25 Casascius coins (physical bitcoin) worth approximately 174 BTC, various metals and Zhong’s 80% stake in Memphis-based RE&D Investments LLC. . The metals seized consisted of “four one-ounce silver bars, three one-ounce gold bars, four 10-ounce silver bars and one gold coin,” the Justice Department said.

Following the DOJ announcement, some people on social media began noticing that one of Zhong’s BTC addresses revealed in a court document matches one posted by Bitcointalk user “Loaded.” Bitmex Search tweeted“In March 2017, Bitcointalk user ‘Loaded’ signed a message from an address with 40,000 bitcoins, asking to do a 1-for-1 exchange for ‘Bitcoin Unlimited’ with Roger Ver. It now appears that those funds were seized by US authorities.

Commenting on Loaded’s Bitcointalk post, Bitcoin.com founder Ver said, “If I remember correctly, he never responded to my DMs to make the bet.”

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What do you think of this case? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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