The verge According to the Department of Justice, in 2012, a guy from Georgia with the age of 32 obtained unlawfully around 50,676 Bitcoin on the dark web site known as The Silk Road. This website has been referred to as "the Amazon of drugs." After discovering the Bitcoin stashed in an underground safe and on a "single-board computer" concealed in a popcorn tin inside a bathroom cupboard, James Zhong pleaded guilty to the crime on Friday, according to a news statement that was issued by the Department of Justice. The statement was issued after investigators discovered the Bitcoin. A few years previously, the Bitcoin had been hidden away in what seemed to be a tip-off to the police about his large hoard of Bitcoin.
The Bitcoin was confiscated by the authorities on November 9, 2021, and its value is believed to be $3.36 billion. Since then, the price on the market has dropped considerably, and it is now only little more than a billion dollars. According to the press release, this is the second highest financial seizure in history, behind the $3.6 billion in stolen Bitcoin that police seized earlier this year in a case apparently featuring TikToker/rapper/Forbes contributor Razzlekhan and her husband. (It's crucial to remember that the total amount of Bitcoins in that seizure was around 95,000, which makes the entire sum much greater.)
The main IRS investigator on the case referred to Zhong's theft as "a clever approach," adding that the thief participated in "a series of convoluted transactions" to disguise the stolen Bitcoins. Zhong's crime was defined as "a sophisticated strategy" by the lead investigator on the case. The Department of Justice asserts that he established nine false identities on The Silk Road, a website accessible via Tor that let users to buy and sell illegal goods and services, in September of 2012. After that, Zhong would send anywhere from 200 to 2,000 Bitcoin (at the time, one Bitcoin was worth anywhere between $10 and $12) and then request a large number of withdrawals, sometimes as many as five in a single second. The Department of Justice asserts that the user abused the service to the tune of several times the amount that he had initially deposited in the wager.
According to an IRS investigator's report, doing this 140 times drained The Silk Road's coffers, which had a maximum of 50,000 Bitcoin. After Bitcoin Cash separated from the main network in 2017, Zhong's share increased. The DOJ claims Zhong exchanged his 50,000 Bitcoin Cash for 3,500 ordinary Bitcoin, adding to his hoard.
The DOJ doesn't explain how it found the stolen Bitcoin, but Protos says Zhong's 2019 police call helped catch him. He reported a burglary with "a lot of bitcoin" stolen. Unlike the IRS, the robbers missed a lot.
Zhong's lawyer also sent the government 860 Bitcoin earlier this year, bringing it closer to its objective of recovering as much of Silk Road founder Ross Ulbricht's money as possible. Thus, Zhong is being charged for wire fraud against a criminal enterprise. The DOJ says he might be sentenced to 20 years in prison on February 22, 2023.