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The man who stole over 50,000 bitcoins from the Silk Road marketplace has pleaded guilty. According to the US Department of Justice, “the seizure was then the largest cryptocurrency seizure” in DOJ history and “remains the Department’s second-largest financial seizure ever.”
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 over 50,000 bitcoins from the Silk Road dark web internet market”. The Justice Department also announced a “historic seizure of $3.36 billion in cryptocurrency” in connection with the case.
The DOJ explained that law enforcement conducted a search at Zhong’s house in Gainesville, Georgia, on November 9, 2021, and “seized approximately 50,676,17851897 bitcoins, then valued at over $3.36 billion,” elaborating:
This seizure was at the time the largest cryptocurrency seizure in the history of the US Department of Justice and today remains the Department’s second largest financial seizure ever.
Zhong also had about 3,500 more bitcoins from exchanging to BTC over 50,000 bitcoin cash (BCH) that he received after the bitcoin blockchain hard fork in August 2017. He used an overseas cryptocurrency exchange for the conversion.
In addition to the BTC seized from his house, Zhong began “voluntarily surrendering to authorities additional bitcoin” starting in March of this year, the DOJ revealed, adding that “In total, Zhong voluntarily surrendered 1,004.14621836 additional bitcoin.”
The government is seeking forfeiture of “approximately 51,680.32473733 bitcoin,” the DOJ noted. At the time of writing, BTC is trading at $20,641.28, so the amount the authorities are asking for is roughly $1.07 billion.
Zhong carried out a scheme to defraud the Silk Road market of the money and property in September 2012, the DOJ said, adding that he “was able to withdraw many times more bitcoin out of Silk Road than he had initially deposited.” For example, the Ministry of Justice described that on 19 September 2012:
Zhong deposited 500 bitcoins into a Silk Road wallet. Less than five seconds after the first deposit, Zhong made five withdrawals of 500 bitcoins in quick succession – i.e. within the same second – resulting in a net profit of 2,000 bitcoins.
On Monday, the US government filed an amended preliminary forfeiture order in the US against the Ross Ulbricht case “seeking to forfeit approximately 51,351.89785803 bitcoins traceable to Silk Road, valued at approximately $3,388,817,011.90 at the time of the seizure.” Silk Road’s founder, Ross Ulbricht, was convicted in 2015 and is currently serving a double life sentence, plus 40 years without parole.
US District Judge Paul Gardephe also entered a preliminary consent forfeiture order on Friday for 154.4268793000044 BTC, $661,900 in cash, 25 Casascius coins (physical bitcoin) worth about 174 BTC, various metals, and Zhong’s 80% -based MREemphiD Investments in LLC. . The metals seized consisted of “four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars and one gold-colored coin,” the Justice Department emphasized.
After the DOJ’s announcement, some people on social media began noticing that one of Zhong’s BTC addresses disclosed in a court document matched one posted by Bitcointalk user “Loaded.” Bitmex Research tweeted: “In March 2017, Bitcointalk user ‘Loaded’ signed a message from an address with 40,000 bitcoin, asking to trade 1 to 1 for ‘Bitcoin Unlimited’ with Roger Ver. It now appears that these funds have been seized by US authorities.”
Commenting on Loaded’s Bitcointalk post, Bitcoin.com founder Ver stated, “As I recall, he never responded to my DMs about betting.”
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