Justice Department Seizes 50,000 Bitcoins, Second Largest Seizure Ever

The digital tokens belonged to James Zhong, who previously pleaded guilty to stealing them. Silk Waythe once popular dark website “amazon for access to illegal drugs, weapons and services. While no love was lost between law enforcement and this site, Zhong’s Bitcoin theft was no less criminal.

Officials found the Bitcoin after executing a search warrant at Zhong’s home in Gainesville, Mass. A “single-board computer” was found hidden in a popcorn box in a bathroom cabinet that held digital signage.

“James Zhong committed wire fraud ten years ago by stealing approximately 50,000 Bitcoins from Silk Road,” said US Attorney Damian Williams in the statement this week. “For nearly 10 years, the whereabouts of this large chunk of missing bitcoin has been a mystery, over $3.3 billion. Thanks to state-of-the-art crypto mining and good old-fashioned police work, law enforcement has located and recovered this impressive stash of criminal proceeds.”

About that dollar figure: Bitcoin was seized in November. 9, 2021, Justice Department officials say. At that time, its value was 3.36 billion dollars. However, there is Bitcoin fell fast since then, and as of Tuesday morning, the value of the seized bitcoin was just over $1 billion.

Ministry of Justice 2017 sold another Bitcoin was purchased directly from Silk Road for just over $48 million.

Justice Department officials said Zhong registered nine fake Silk Road accounts in September 2012 and deposited between 200 and 2,000 bitcoins into the accounts. He would then flood the site with withdrawal requests (up to five per second), tricking the site into giving him multiples of the amount he had deposited. After doing this 140 times, he had withdrawn all of the site’s cryptocurrency holdings.

Zhong also received $662,000 in cash, physical Bitcoin coins, an 80% stake in a Memphis-based real estate investment company, and more.

He faces up to 20 years in prison.