US Seeks Forfeiture Of $1bn In Bitcoin Stolen From Silk Road

Matthew Broersma,

US law enforcement seeks forfeiture of more than $1bn in Bitcoin stolen from illegal marketplace Silk Road in 2012 hack

US law enforcement authorities are seeking the forfeiture of more than $1 billion (£880m) in seized Bitcoin that they said was stolen from notorious illegal online marketplace Silk Road in 2012.

The amount, the second-largest seizure in Department of Justice history, was seized in a November 2021 search of the home of James Zhong in Gainesville, Georgia.

Officials said on Monday that Zhong had pleaded guilty to stealing the funds on Friday.

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The more than 50,000 Bitcoin he stole was worth some $3.36bn at the time it was seized, but has fallen in value to just over $1bn due to fluctuations in the value of the cryptocurrency.

At the time the seizure was the biggest financial seizure in DOJ history, but was surpassed by the seizure in February of some 70,000 Bitcoin connected to the hack of exchange Bitfinex.

Agents previously seized another cache of 70,000 Silk Road-related Bitcoin in November 2020.

Zhong obtained the funds by carrying out a hack that tricked Silk Road’s payment systems into depositing the Bitcoin into his account. He then moved the funds into various other wallets.

Silk Road itself was shut down the following year, in 2013, when law enforcement arrested founder Ross Ulbricht, who was later sentenced to life in prison.

Concealment

The whereabouts of the stolen Bitcoin remained unknown until last year, when the search of Zhong’s home eventually turned up almost the entire amount encoded on a single-board computer Zhong had concealed in a bathroom cupboard.

The computer was found at the bottom of a popcorn tin concealed beneath blankets, officials said.

“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,” said US Attorney Damian Williams.

Law enforcement also recovered other items from the home, including $661,900 in cash and gold and silver bars.

Zhong plead guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison. His sentencing is scheduled for February of next year.