US Justice Department lands conviction in $3.36 billion Silk Road Bitcoin heist

Shawn Knight

Posts: 14,677   +175
Staff member
In a nutshell: On November 9, 2021, law enforcement seized 50,676.17851897 Bitcoins from the Gainesville, Georgia, home of James Zhong. The haul was valued at around $3.36 billion at time of the seizure (which just happened to be right around Bitcoin's all-time high). At the time, it was the largest cryptocurrency seizure in the history of the DOJ and remains the department's second largest financial seizure ever.

The US Department of Justice on Monday announced a conviction in a case involving the seizure of $3.36 billion worth of Bitcoin.

According to authorities, Zhong unlawfully obtained the Bitcoins from former dark web marketplace Silk Road way back in 2012. He allegedly created nine Silk Road accounts ("fraud accounts") designed to conceal his identity then triggered over 140 transactions in rapid succession to trick the site's withdrawal-processing system into releasing the Bitcoins from its payment system into his accounts. Zhong then reportedly transferred the coins to other accounts in an effort to obfuscate the source and conceal his identity.

The Justice Department noted Zhong didn't list any item or service for sale on Silk Road, nor did he purchase any item or service. Instead, he would fund his fraud accounts with an initial deposit of between 200 and 2,000 Bitcoins then quickly execute a series of withdrawals. This allowed him to withdraw many times more Bitcoins than he initially deposited.

In one transaction that took place on September 19, 2012, Zhong allegedly deposited 500 Bitcoins into a Silk Road wallet and then executed five withdrawals of 500 coins each – all within one second – which resulted in a net gain of 2,000 Bitcoins. In another cited example, Zhong made a single deposit and over 50 Bitcoin withdrawals.

During the November 9 seizure, authorities found Bitcoins in an underground floor safe and on a single-board computer hidden under blankets in a popcorn tin stored in a bathroom closet at Zhong's home. More than half a million in cash was also recovered in addition to various amounts of precious metals. Zhong later surrendered more than 1,000 additional Bitcoins to the government.

Zhong pled guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison. He is scheduled to be sentenced on February 22, 2023.

Image credit: Ekaterina Bolovtsova, Alesia Kozik

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Uncle Al

Posts: 9,458   +8,723
Absolutely the maximum penalty ..... then retry him in State court for another 20 years ..... According to the Supreme Court, this is not considered double jeopardy or final jeopardy for that matter ..... LOL


Posts: 590   +939
What a id1ot to think he would get away and still live in US after the crime. It took DOJ 9 years to bust him.......that's odd.


Posts: 169   +172
Imagine how overconfident one must be to stole 50k Bitcoins from underground Tor market, keep it in his Raspberry Pi for 10 years and not even attempt sale, exchange, mix/launder his coins (in JoinMarket and other places), obtain secondary passport, move country away from US, pay taxes from cleaned bitcoins and buy villa somewhere in tropical island and live happily. Instead he keeps living in the US and stores his dirty traceable coins on Raspberry Pi, unencrypted, DOJ immediately gets access to the wallet and he gets now up to 20 years in prison. How stupid this guy is.


Posts: 1,497   +1,085
This attack - should never happen - People used to be able to clear out a bank account at am ATM this way 30 years ago - Take 200 pounds ( max daily limit then ) just before midnight , then another just after in the UK
Since he didn't steal anything real or tangible, they should let him off with the minimum, or maybe just time served for the electricity that was used to mine the coins.


Posts: 233   +420
So he scammed scammmers ... and stole fake money that now the Feds will use to bust more *****s ... conflicted ... he is a class-a idjit if that pi was in fact unencrypted


Posts: 169   +172
Since he didn't steal anything real or tangible, they should let him off with the minimum, or maybe just time served for the electricity that was used to mine the coins.
You are mistaken, cryptocurrencies are widely recognized as property in the US. Stealing bitcoin is like stealing a piece of art or vintage car and so on. Real loss to the owner.
In this case though I am not sure if anyone is going to press charges - SilkRoad admin is already serving life in prison for setting up and managing the website.


Posts: 19,354   +8,491
Supreme Court........The Masters of Fraud!
I don't know about the "masters of fraud" thing. But Trump's appointees should be impeached for perjuring themselves in front of congress. Them, along with this a**hole Clarence Thomas.

I think you're confusing "fraud", with, "perjury". But perhaps that's just a semantic point.


Posts: 19,354   +8,491
Who knows what the delays were, but at least they busted the guy. The guy obviously suffers from over-confidence.
The only problem with this prosecution taking place, is the fact that it tacitly validates bitcoin. My approach would have been to the victims, "fu*k 'em if that can't take a joke".