A criminal who stole more than 50,000 Bitcoins from the dark web marketplace Silk Road in 2012 has admitted guilt and lost everything, and he is likely facing time in prison.
The US Department of Justice announced Monday that James Zhong, 32, guilty to committing wire fraud in September 2012 by opening nine Silk Road accounts that he used to set off “over 140 transactions in fast succession in attempt to mislead Silk Road’s withdrawal-processing system.”
According to our sources, Zhong received “about 51,680.32473733 Bitcoins” through that scheme, which were worth over $3.6 billion (£3.1 billion) when they were confiscated by the federal government last year. Due to the slumping digicash market, the sum is currently worth slightly more than $1 billion (£867 million).
It appears that Zhong took advantage of a design defect in Silk Road to have money held by the marketplace released to him, which he then tried to hide his identity by laundering through many wallets.
Along with taking back all of Zhong’s Bitcoin, the DoJ reported seizing 25 actual Casascius coins worth 174 Bitcoin, $661,900 (£573,834) in cash, some bars of precious metals, and Zhong’s 80 percent stake in RE&D Investments, a real estate firm.
When it raided Zhong’s home in November 2021, the DoJ wrote that it discovered Zhong’s assets “in an underground floor safe; and on a single-board computer that was hidden under blankets in a popcorn tin stored in a bathroom closet.”
Zhong, of Gainesville and Athens, Georgia, entered a guilty plea last week to the charge of wire fraud, which carries a possible 20-year prison sentence. He will be sentenced in February of next year.
