On April 14, 2023, the Department of Justice (DOJ) of the Southern District of New York revealed that the hacker responsible for the Silk Road Marketplace breach was sentenced to one year in prison for wire fraud. James Zhong stole more than 50,000 bitcoins from the Darknet Marketplace (DNM) in September 2012. DOJ attorney Damian Williams said Zhong utilized bitcoin blending services, international cryptocurrency exchanges, and “an impressive array of technological tools to frustrate tracking efforts.”
Authorities in the Silk Road raid seized companies with ties to bitcoin, precious metals, and substantial real estate
detailed after a court filing that the U.S. government plans to sell 41,000 seizedBitcoins (BTC)and 9,861.1707894during this year. in BTCthat occurred on March 14, 2023, James Zhong wassentenced to one year inprison by U.S. District Judge Paul G. Gardephe, as revealed by the New York Department of Justice.
Zhong utilized an elusive scheme to steal from Silk Road DNM, creating nine Silk Road accounts and causing 140 transactions that tricked DNM’s withdrawal system to release 50,000BTCto his to a controlled address.
Interestingly, Zhong never used Silk Road for its intended purpose, and the fake accounts were created solely for the purpose of performing the hack. Investigators estimate that approximately 200 to 2,000BTCwere needed to obtain the net total of more than 50,000BTC.
A few more years later, Zhong obtained 50,000Bitcoin Cash (BCH)when Bitcoin forked in August 2017 and exchanged allBCHfor 3,500using an international cryptocurrency exchange, after BTCforked. The funds were found in a basement floor safe soaked in blankets and a can of Cheetos popcorn at Zhong’s residence in Gainesville, Georgia.
Federal authorities seized approximately 51,351.89785803 bitcoins, a stash of precious metals, and $661,900 in cash on three separate occasions. In addition, authorities took away Zhong’s 80% interest in RE&D Investments, a Memphis company with significant real estate holdings.
Zhong, 32, pleaded guilty to wire fraud in a case involving the Internal Revenue Service (IRS), the Western Cybercrime Unit of the Los Angeles Division of Criminal Investigation, and the Athens-Clarke County Police Department, in addition to the New York Department of Justice.
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