Silk Road BTC Heist Perpetrator Pleads Guilty And Gets Convicted

Following a guilty plea by an individual identified as James Zhong in connection to “unlawfully obtained” Bitcoin (BTC) from the Silk Road marketplace in 2012, the case has now been closed.

According to the United States Attorney’s Office for the Southern District of New York, Zhong pled guilty to the wire fraud scheme which wiped out 50,676 BTC from Silk Road.

In November 2021, law enforcement authorities received a warrant to search Zhong’s home in Gainesville, Georgia. Upon the search, exactly 50,676.17851897 BTC were discovered in devices and seized.

At that time, the stolen digital currency was worth around $3.36 billion. Notably, that was the largest crypto seizure that had happened in the U.S Department of Justice at that time. Fast forward to this day, it is the second-largest seizure in the history of the DoJ. 

As per a statement made by the United States Attorney for the Southern District of New York Damian Williams, “James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road.  For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.”

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Speaking of how the digital assets were discovered, he acclaimed all “Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.  This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”

A special agent from the U.S Internal Revenue Service Criminal Investigation (IRS-CI) Charge Tyler Hatcher described the several complex strategies which Zhong employed to conceal the proceeds of his illicit affair, especially, the use of the darknet.  In 2012 when he initiated the scam, he created nine Silk Road accounts to hide his true identity.

With these accounts, he was able to trigger up to 140 transactions in quick succession to deceive and bypass the Silk Road’s withdrawal-processing system. With all pieces of evidence against him, Zhong finally pled guilty to the unlawful act and is expected to carry out a few forfeiture actions including 80% interest on his investments in RE&D.

Ross Ulbricht, the creator of Silk Road recently started his tenth-year jail term, he also apologized to the public for the harm he did.