U.S. solves Silk Road Dark Web mystery, seizes $3.36b in Bitcoin

Category: Americas Crypto Regulatory

The U.S. Justice Department said it has solved a ten-year mystery relating to missing Bitcoin worth $3.36 billion that was stolen from the Silk Road Dark Web in 2012.

Authorities found the Bitcoin hidden in devices in defendant James Zhong’s home, according to a press release from the U.S. Attorneys, the Southern District of New York.

It was the second-biggest seizure of Bitcoin ever for the U.S. Justice Department and at the time was the largest ever. Zhong pleaded guilty to wire fraud in New York on Nov. 4th.

“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road,” U.S. Attorney Damian Williams said. “For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. 

Bitcoin under a popcorn tin

“Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds. 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.”

Zhong was accused of setting up a sophisticated scheme to steal bitcoin from the Silk Road Marketplace. Silk Road was an online “darknet” black market that was in operation from 2011 to 2013. 

The statement said drug traffickers and other unlawful vendors used the marketplace to distribute massive quantities of illegal drugs and other illicit goods. 

Silk Road’s founder Ross Ulbricht was convicted in 2015 and sentenced to life in prison. 

In September 2012, Zhong executed a scheme to defraud Silk Road of its money and property by creating a string of approximately nine Silk Road accounts  in a manner designed to conceal his identity.

He then triggered more than 140 transactions in rapid succession in order to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin from its Bitcoin-based payment system into ZHONG’s accounts.

After this, Zhong transferred the Bitcoin into a variety of separate addresses also under his control, all in a manner designed to prevent detection, conceal his identity and ownership, and obfuscate the Bitcoin’s source. 

Join us: 14 – 18 November for Malta Week

One of the first European countries to regulate the gaming sector, Malta is a hub of global business. The island is an obvious choice for SiGMA’s presence in Europe and a strong foundation for the field’s future. With a plethora of prospects for both investors and entrepreneurs looking to shape the future of this multi-billion dollar business, Malta Week will bring together industry giants among the affiliates, operators, and suppliers of the gaming sector.

Budapest, Hungary event


Budapest, Hungary

02 - 04 September 2024