US authorities announce conviction connected to Bitcoin stolen from Silk Road

The United States Attorney’s Office for the Southern District of New York has announced that an idiosyncratic has pled blameworthy to ligament fraud charges connected to “unlawfully obtained” Bitcoin from the Silk Road marketplace successful 2012.

In a Nov. 7 announcement, the U.S. Justice Department said James Zhong pled blameworthy to ligament fraud charges related to executing a strategy to bargain astir 50,676 Bitcoin (BTC) from Silk Road. Authorities seized the Bitcoin from Zhong’s location successful the authorities of Georgia successful November 2021, astatine which clip the full worth of the crypto was astir $3.36 billion.

“James Zhong committed ligament fraud implicit a decennary agone erstwhile helium stole astir 50,000 Bitcoin from Silk Road,” said U.S. Attorney Damian Williams. “For astir 10 years, the whereabouts of this monolithic chunk of missing Bitcoin had ballooned into an implicit $3.3 cardinal mystery.”

Williams cited “state-of-the-art cryptocurrency tracing” and “good old-fashioned constabulary work” successful the authorities tracking down and recovering the stolen BTC. IRS peculiar agents raided Zhong’s property, uncovering much than 50,491 BTC successful a level harmless and “on a single-board machine that was submerged nether blankets successful a popcorn tin” successful summation to different hoard of much than 11 BTC, $661,900 successful cash, and 25 Casascius coins worthy astir 174 BTC.

“This lawsuit shows that we won’t halt pursuing the money, nary substance however expertly hidden, adjacent to a circuit committee successful the bottommost of a popcorn tin.”

According to the Justice Department, Zhong’s strategy progressive creating 9 accounts connected the marketplace to conceal his individuality and triggering much than 140 transactions successful abbreviated bid “to instrumentality Silk Road’s withdrawal-processing system” to nonstop the BTC. He was capable to acceptable up the accounts with “the bare minimum of information” and didn’t behaviour immoderate listings oregon sales. After withdrawing much BTC than helium had deposited, Zhong moved the funds retired of Silk Road and “consolidated them into 2 high-value amounts.”

“As an example, connected September 19, 2012, Zhong deposited 500 Bitcoin into a Silk Road wallet,” said the Justice Department. “Less than 5 seconds aft making the archetypal deposit, Zhong executed 5 withdrawals of 500 Bitcoin successful accelerated succession — i.e., wrong the aforesaid 2nd — resulting successful a nett summation of 2,000 Bitcoin.”

Related: DoJ seizes $3.6B successful crypto and arrests 2 successful transportation with 2016 Bitfinex hack

Silk Road, defunct for astir 10 years, primitively allowed users to bargain and merchantability illicit goods specified arsenic weapons and stolen recognition paper information. However, the marketplace drew the attraction of the FBI arsenic galore listings were for amerciable drugs. 

Silk Road creator Ross Ulbricht was arrested for his relation successful 2013 and is currently serving 2 beingness sentences without the anticipation of parole. Zhong could look up to 20 years successful situation for ligament fraud. He is expected to beryllium sentenced successful February 2023.