The U.S. Attorney’s Office for the Southern District of New York released a statement announcing that James Zhong has been convicted of wire fraud for stealing 50,000 Bitcoin from the illicit Silk Road marketplace. Zhong has been sentenced to one year and one day in prison.
According to the announcement, “as part of the ZHONG investigation, the Government has obtained final orders of forfeiture for, among other items, 51,680.32473733 Bitcoin, valued at over $3.4 billion at the time of seizure and over $1.57 billion today.”
Allegedly, Zhong devised a series of around nine fraudulent accounts on the Silk Road, with the aim of concealing his true identity. He executed over 140 rapid transactions in quick succession, utilizing a scheme to deceive Silk Road’s withdrawal-processing system.
As a result, approximately 50,000 Bitcoin were released from the platform’s Bitcoin-based payment system into Zhong’s accounts.
U.S. Attorney Damian Williams revealed that James Zhong concealed his actions utilizing a decentralized Bitcoin mixer, an overseas cryptocurrency exchange, and advanced technological tools to obfuscate tracing efforts.
During November 2021, law enforcement agents successfully retrieved approximately 50,491.06251844 Bitcoin, which were believed to be proceeds of crime, from Zhong’s residence in Gainesville, Georgia.
Subsequently, starting in March 2022, Zhong voluntarily began surrendering to the Government additional Bitcoin that he had access to and had not utilized.
In November 2022, US DOJ seized $3.36 Billion worth of the stolen Bitcoin after James Zhong pleaded guilty to wire fraud. It is said to be the DOJ’s second-largest financial seizure to date, following its seizure of $3.6 billion in cryptocurrencies associated with the 2016 hack of Bitfinex.
Recently, U.S. Government sold Silk Road case-related Bitcoin for nearly $215M. The community even made fun of the $215,000 in transaction fees paid by the government, which represents around 0.1% of the total quantity of Bitcoin sold.