According to a report released by the Department of Justice (DOJ) on Monday, the Silk Road dark web market was connected to more than $3.36 billion worth of bitcoins.
Through wallet addresses identified by investigators, a man who the Justice Department said confessed to stealing about 50,676 bitcoins has been linked to a figure from the early days of cryptocurrency.
James Zhong, a Silk Road hacker, may have been “uploaded,” an online identity that made 135 posts on Bitcoin Talk between November 2012 and March 2017 and described himself as a “multi-millionaire, broker, and bitcoin asset manager.” . Ten years ago, a bitcoin was worth about $10.
James Zhong was involved in wire fraud when he stole about 50,676 bitcoins from Silk Road more than ten years ago, according to US Attorney Damian Williams. The whereabouts of this massive amount of missing Bitcoin has been a $3.3 billion mystery for nearly ten years.
US authorities tracking technique
Williams credited authorities’ success in finding and recovering the stolen bitcoins to “advanced cryptocurrency tracking” and “good old fashioned police work.”
When IRS special agents searched Zhong’s property, they found a stash of more than 11 bitcoins, $661,900 in cash and 25 cassius coins worth about 174 bitcoins each, as well as more than 50,491 bitcoins in a floor safe and They discovered a single board computer. which was hidden under the blankets in the form of popcorn.
Zhong is accused of using a trading strategy in September 2012 to steal bitcoins from Silk Road without selling or buying real items from his marketplace. Before its founder, Ross Ulbricht, was sentenced to life in prison in 2015, the black market was widely used to trade illegal drugs and other products.
Silk Road vs Stolen Bitcoin
The Justice Department alleges that Zhong tricked Silk Road’s withdrawal processing system and released 50,000 bitcoins to multiple accounts by making more than 140 transactions in quick succession, all while remaining anonymous.
Keeping his previously stolen Bitcoin, Zhong also apparently acquired an equal amount of Bitcoin Cash (BCH) five years later, a hard form of BTC designed to increase scalability. He later sold that BCH to a foreign cryptocurrency exchange for an additional 3,500 bitcoins, according to the DOJ statement.
Despite the fact that Bitcoin addresses are essentially anonymous, every transaction on the blockchain is widely accessible and traceable. So intelligence services can use sophisticated tools to trace the source of such coins.
Zhong could face up to 20 years in prison for wire fraud. He is expected to be sentenced in February 2023.
This is the second largest Bitcoin seizure in the history of the US Department of Justice, behind only the recovery of 94,000 coins stolen from the Bitfinex attack in 2016. The coins were worth nearly $3.6 billion at the time of recovery.