Justice Department Reveals Massive $3.36 Billion Crypto Seizure
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The Department of Justice (DOJ) on Monday announced a massive seizure of bitcoin stolen from the now-shuttered Silk Road online marketplace and the conviction of the person the agency said took the cryptocurrency.
About a year ago, authorities took possession of $3.36 billion worth of stolen bitcoin, marking the DOJ’s “second largest financial seizure ever,” according to a statement from the agency. The more than 50,600 bitcoins were illegally obtained years ago by James Zhong, who the DOJ said pleaded guilty Friday to one count of wire fraud.
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According to the DOJ, Zhong committed wire fraud in September 2012, when he tricked Silk Road’s withdrawal processing system into releasing the bitcoin to nine accounts he had set up on the illegal marketplace. He tricked the system by making initial deposits of bitcoin and then making withdrawals “in rapid succession,” the agency said.
Bitcoins are seen in this illustration photo taken on September 27, 2017. (Reuters/Dado Ruvic/Illustration/Reuters Images)
The Department of Justice (DOJ) announced on Monday, November 7, 2022, a massive seizure of bitcoin stolen from the now-closed Silk Road online marketplace. (Chesnot/Getty Images/Getty Images)
He then moved the bitcoin to various addresses in an effort to “obstruct discovery, conceal his identity and ownership, and obscure the Bitcoin’s source,” the DOJ release said.
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Years later, in November 2021, agents of the Internal Revenue Service, Criminal Investigation recovered nearly 50,500 bitcoin of the total “proceeds of crime” from an “underground safe” and a “single desktop computer” hidden in a popcorn box inside a bathroom cabinet in his home in Georgia, according to the DOJ release.
Bitcoin traded above $42,300 early Monday morning, November 7, 2022, as the cryptocurrency market was down overall. (iStock/iStock)
“For nearly ten years, the whereabouts of this huge chunk of missing Bitcoin had become a mystery worth over $3.3 billion,” US Attorney Damian Williams said in a statement. “Thanks to state-of-the-art cryptocurrency tracking and good old-fashioned policing, police found and recovered this impressive cache of crime.”
Zhong’s sentencing is scheduled to take place on February 22. He faces up to 20 years in prison for the single wire fraud count, the DOJ said.
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