DoJ Seizes 50,676 Bitcoin From Silk Road Hacker James Zhong

After a decade of intense investigation, Silk Road hacker James Zhong has pleaded guilty to defrauding the then-famous darknet marketplace Silk Road. As a result, the federal government of the United States has obtained security keys belonging to 50,676 Bitcoins, currently worth approximately $999 million at prices of around $19,723. The announcement was a major breakthrough for United States law enforcement, which has studied block by block until the seizure.

U.S. Attorney Damian Williams said: “ …. This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”

Interestingly, Zhong was awarded an equal estimate of Bitcoin Cash after the August 2017 hard fork. 

“ZHONG thereafter exchanged through an overseas cryptocurrency exchange all of the BCH Crime Proceeds for additional Bitcoin, amounting to approximately 3,500 Bitcoin of additional crime proceeds,” the DoJ noted.

Closer Look at Silk Road and Bitcoin Market

Silk Road was the top dark website between 2011 and 2013. A sting operation that included international law enforcement agencies captured the site’s founder Ross Ulbricht, who was jailed in the United States for life imprisonment. The move has, however, been contested by Ulbricht’s family and friends, who believe he was unfairly represented.

“Our entire family loves Ross and misses him terribly. Ross’s brutal, inflexible sentence has caused unimaginable suffering and grief to every one of us,” Gale LaCava, aunt, in a clemency letter

Zhong and Ulbricht may now have a chat behind bars. Reportedly, ZHONG executed a scheme to defraud Silk Road of its money and property by creating a string of approximately nine Silk Road accounts. 

According to the DoJ, Zhong intended to conceal his identity through sophisticated crypto transactions. Moreover, Tornado Cash, among other cryptocurrency mixers, existed freely in the United States.

While the announcement has been classified as one of the biggest seizures by United States law enforcement, Bitcoin price has retreated over 5 percent today. Furthermore, there is a newly created sell pressure since the United States government will soon auction the Bitcoin stash. 

In addition to the Bitcoin holding, the United States government has seized ZHONG’s 80 percent interest in RE&D Investments, LLC, a Memphis-based company with substantial real estate holdings.