US Attorney’s Office Seizes Billions of Bitcoins Associated With Silk Road

According to a report released on Monday by the Department of Justice (DOJ), the dark web marketplace Silk Road was connected to more than $3.36 billion worth of Bitcoin. Following James Zhong’s Friday guilty plea to one count of wire fraud, who was in charge of receiving the 50,676 Bitcoin in September 2012, the US Attorney’s Office made the disclosure. One Bitcoin was valued at about $10 ten years ago.

The only larger Bitcoin seizure in DOJ history, which ranks second, was the recovery of 94,000 stolen coins during the 2016 Bitfinex attack. Those coins were valued at around $3.6 billion when they were recovered. The maximum sentence for Zhong’s alleged offense is 20 years in jail.

“For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” stated U.S. Attorney for the Southern District of New York Damian Williams. The lawyer said that law enforcement discovered the funds by employing “cryptocurrency tracing” and “good old-fashioned police work.”

Zhong is accused of using a trading strategy in September 2012 to steal Bitcoin from Silk Road without selling or purchasing any genuine goods from its marketplace. Before its inventor, Ross Ulbricht, was given a life sentence in jail in 2015. At that time, the black market was widely used for trading illegal narcotics and other products. The DOJ alleges that Zhong deceived Silk Road’s withdrawal processing system into releasing 50,000 bitcoin into his several accounts by swiftly initiating over 140 back-to-back transactions while remaining anonymous.

By hanging onto his previously stolen Bitcoin five years later, Zhong purportedly also acquired an equivalent sum of Bitcoin Cash (BCH), a hard-forked form of Bitcoin intended for increased scalability. According to the DOJ’s statement, he sold that BCH at a foreign cryptocurrency exchange for an additional 3,500 Bitcoin. Even though Bitcoin addresses are essentially anonymous, every transaction is tracked on its widely accessible blockchain. Intelligence services can thus use sophisticated methods to determine the origin of such coins.

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