The U.S. just seized over $3 billion in Bitcoin, the second-highest amount of criminal cash ever
The U.S. Department of Justice (DOJ) just announced that it seized about $3.36 billion in stolen Bitcoin during a previously unannounced 2021 raid, which has ties to the infamous 2016 breach of the cryptocurrency exchange Bitfinex.
'Some of the stolen bitcoin was hidden inside a popcorn container in a bathroom cupboard'
During the raid, which was on James Zhong's home, the DOJ reportedly discovered approximately 50,676 Bitcoin worth over $3.36 billion, the second-largest financial seizure by federal law enforcement to date. According to the DOJ, the police took it on November 9, 2021, when they searched his home in Gainesville, Georgia.
According to an affidavit signed by IRS special agent Trevor McAleenan, Some of the stolen bitcoin was hidden inside a popcorn container in a bathroom cupboard.
Zhong admitted guilt to the charge of wire fraud, which carries a possible 20-year jail term.
A theft facilitated by the sale of illegal drugs on the dark web
Authorities claim that Zhong stole Bitcoin from the Silk Road dark web marketplace, where drugs and other criminal goods were bought and sold using Bitcoin.
Ross Ulbricht, the man who founded Silk Road, was found guilty on seven charges of facilitating the sale of illegal drugs using Bitcoin in 2015. He was given a life sentence and lost his 2017 appeal.
Zhong utilized a "sophisticated strategy," according to Special Agent in Charge Tyler Hatcher of the Internal Revenue Service's Criminal Investigation, to steal the Bitcoin from Silk Road. According to the press release, Zhong set up nine phony accounts on Silk Road in September 2012 and funded each one with 200–2,000 Bitcoin.
The marketplace's withdrawal-processing system was duped into releasing almost 50,000 Bitcoin into his accounts after he immediately started over 140 transactions. Zhong subsequently moved the Bitcoin into a number of his wallet accounts.
Blockchain analysis and 'good old-fashioned' police work solved decade-long mystery
Law enforcement and blockchain analytic professionals were able to reclaim more than 50,000 Bitcoins from Zhong thanks to blockchain analysis and good old-fashioned police work.
“For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” U.S. Attorney Damian Williams claimed in a press release.
The Southern District of New York claims that Zhong carried out the hack by exploiting the market's flaws.
Zhong was accused of wire fraud by the prosecution, and on Nov .04 he entered a guilty plea. Following court records, he was released the same day after posting a $310,000 bail. Federal law enforcement seized all his digital assets in addition to $661,900 in cash, some silver and gold bars, and other items from his safe. Zhong was additionally compelled to sell his holdings in a real estate company.
Michael Bachner, Zhong's attorney, said that his client had "virtually" returned all of the Bitcoin. “Mr Zhong is extremely remorseful for his conduct that occurred over ten years ago when he was just 22,” Bachner said in a statement.
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