Public records show Zhong was the president and CEO of a self-created company, JZ Capital LLC, which he registered in Georgia in 2014. They even uncovered crypto stored on a computer submerged under blankets in a popcorn tin in a bathroom closet, according to the press release. Through blockchain analysis and good old-fashioned police work, law enforcement and blockchain analytic experts was able to recover more than 50,000 bitcoin from Zhong. Zhong then transferred the bitcoin into a variety of wallet addresses all under his control. He then triggered over 140 transactions in rapid succession, which tricked the marketplace’s withdrawal-processing system to release approximately 50,000 bitcoin into his accounts. According to the press release, in September 2012, Zhong created nine fraudulent accounts on Silk Road, funding each with between 200 and 2,000 bitcoin. Special Agent in Charge Tyler Hatcher, of the Internal Revenue Service – Criminal Investigation, said Zhong used a “sophisticated scheme” to steal the bitcoin from Silk Road. Attorney Damian Williams said in a press release.Īccording to the Southern District of New York, Zhong took advantage of the marketplace’s vulnerabilities to execute the hack. “For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” U.S. Its founder, Ross William Ulbricht, is now serving a life sentence in prison. Silk Road was launched in 2011, but the Federal Bureau of Investigation shut it down in 2013. It is the DOJ’s second-largest financial seizure to date, following its seizure of $3.6 billion in allegedly stolen cryptocurrency linked to the 2016 hack of the crypto exchange Bitfinex, which the DOJ announced in February.Īccording to authorities, Zhong stole bitcoin from the illegal Silk Road marketplace, a dark web forum on which drugs and other illicit products were bought and sold with cryptocurrency. authorities seized about 50,676 bitcoin, then valued at over $3.36 billion, from Zhong during a search of his house in Gainesville, Georgia, on Nov.

Zhong pleaded guilty Friday to one count of wire fraud, which carries a maximum sentence of 20 years in prison. Department of Justice announced Monday that it seized about $3.36 billion in stolen bitcoin during a previously unannounced 2021 raid on the residence of James Zhong.

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