The man who stole over 50,000 bitcoins from the Silk Road marketplace has pleaded guilty. According to the U.S. Department of Justice, “the seizure was then the largest cryptocurrency seizure” in DOJ history and “remains the Department’s second-largest financial seizure of all time.”
Silk Road exploiter pleads guilty
The U.S. Department of Justice (DOJ) announced on Monday that James Zhong pleaded guilty on Friday to “committing wire fraud in September 2012 when he wrongfully obtained over 50,000 bitcoin from the dark web internet marketplace Silk Road.” The Justice Department also announced a “historic cryptocurrency seizure of $3.36 billion” in connection with the case.
The DOJ stated that on November 9, 2021, law enforcement conducted a search at Zhong’s home in Gainesville, Georgia and “seized approximately 50,676,17851897 Bitcoin, which was then valued at over $3.36 billion,” and conducted out:
This seizure was the largest cryptocurrency seizure in U.S. Department of Justice history at the time, and to date remains the Department’s second-largest financial seizure of all time.
Zhong also had about 3,500 more Bitcoins from exchanges for BTC via 50,000 Bitcoin Cash (BCH) that he received after the Bitcoin blockchain hard fork in August 2017. He used a cryptocurrency exchange abroad for the conversion.
In addition to the BTC confiscated from his home, Zhong began “voluntarily surrendering additional bitcoins to the government” beginning in March this year, the DOJ announced, adding that “Zhong has voluntarily surrendered a total of 1,004,14621836 additional bitcoins.”
The government is targeting “approximately 51,680.32473733 bitcoin” for expiration, the DOJ noted. At the time of writing, BTC is trading at $20,641.28, making the government target amount around $1.07 billion.
Zhong’s plan to defraud the Silk Road marketplace
Zhong executed a plan to defraud the Silk Road marketplace of his money and property in September 2012, the DOJ said, adding that he “was able to withdraw a lot more bitcoin from Silk Road than he did in the first place.” instance had paid in”. For example, on September 19, 2012, the Department of Justice stated:
Zhong deposited 500 Bitcoin into a Silk Road wallet. Less than five seconds after making the first deposit, Zhong made five withdrawals of 500 bitcoin in quick succession – i.e. within the same second – resulting in a net profit of 2,000 bitcoin.
On Monday, the US government filed an amended preliminary confiscation order in the United States case against Ross Ulbricht, “attempting to forfeit approximately 51,351,89785803 bitcoin traceable to Silk Road and valued at approximately 3,388 at the time of seizure $.817,011.90″. Silk Road founder Ross Ulbricht was convicted in 2015 and is currently serving a double life sentence plus 40 years without parole.
U.S. District Judge Paul Gardephe on Friday also issued a consensual preliminary foreclosure order over 154.4268793000044 BTC, $661,900 in cash, 25 Casascius coins (physical bitcoin) worth about 174 BTC, various metals and Zhong’s 80 percent interest in the Memphis-based RE&D Investments LLC. The metals seized consisted of “four 1-ounce silver-colored bars, three 1-ounce gold-colored bars, four 10-ounce silver-colored bars and one gold-colored coin,” the Justice Department said.
Following the DOJ’s announcement, some people on social media began noticing that one of Zhong’s BTC addresses revealed in a court document matches one posted by Bitcointalk user Loaded. Bitmex Research tweeted: “In March 2017, Bitcointalk user ‘Loaded’ signed a message from an address with 40,000 bitcoins asking for a 1-for-1 exchange for ‘Bitcoin Unlimited’ with Roger Ver. It now appears that these funds have been confiscated by US authorities.”
Bitcoin.com founder Ver commented on Loaded’s Bitcointalk post: “As far as I can remember, he never replied to my DMs regarding the bet.”
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Kevin Helms
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