On April 14, 2023, the Southern District of New York Department of Justice (DOJ) revealed that the hacker responsible for the Silk Road Market breach had been sentenced to one year in prison on wire fraud charges. James Zhong stole more than 50,000 bitcoins from the dark web market (DNM) in September 2012. DOJ attorney Damian Williams stated that Zhong had used a bitcoin mixing service, an international cryptocurrency exchange, and “a impressive array of technological tools to thwart tracking efforts. ”
Officials seize Bitcoin, precious metals and a company with substantial real estate ties in Silk Road investigation
After a court filing detailed the US government’s intentions to sell 41,000 seized Bitcoin (BTC) this calendar year and the sale of 9,861.1707894 BTC which occurred on March 14, 2023, James Zhong was sentenced to one year in prison by federal district judge Paul G. Gardephe, as revealed by the New York Department of Justice.
Zhong had used an elusive scheme to steal from the Silk Road DNM, creating nine Silk Road accounts and triggering 140 transactions that tricked the DNM’s withdrawal system to release 50,000 BTC to addresses under your control.
Interestingly, Zhong never used Silk Road for its intended purpose, and the fake accounts were created solely for the purpose of executing the hack. Researchers estimate that it took approximately 200 to 2,000 BTC for a net total of more than 50,000 BTC.
Also, years later, Zhong got 50,000 Bitcoin Cash (BCH) when Bitcoin forked in August 2017, and traded all the BCH using an offshore cryptocurrency exchange for 3,500 BTC after the fork. The funds were discovered at Zhong’s residence in Gainesville, Georgia, in a basement safe submerged in blankets and a can of Cheetos popcorn.
Federal authorities seized approximately 51,351.89785803 bitcoins on three separate occasions, a cache of precious metals, and $661,900 in cash. In addition, officials seized Zhong’s 80% stake in RE&D Investments, a Memphis company with significant real estate holdings.
Zhong, 32, pleaded guilty to wire fraud, and aside from the New York Department of Justice, the case involved the Internal Revenue Service (IRS), Los Angeles Field Office Western CyberCrime Unit of Criminal Investigation and the Athens-Clarke Department of Justice. County Police Department.
What do you think the implications of this case will be for future cryptocurrency-related crimes? Share your thoughts on this topic in the comments section below.
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