Man Arrested For Stealing Over $3bn Worth Of Bitcoin

In what the authorities refer to be the second-largest cryptocurrency seizure, US police have detained a Georgia man who now faces up to 20 years in jail after more than $3 billion in stolen Bitcoin was discovered concealed at his house in a popcorn tin.

James Zhong, 32, admitted on Friday, November 11, to taking Bitcoin from the unlawful Silk Road bazaar, which the FBI closed down in 2013, ten years prior.

This Monday, the U.S. Department of Justice said that when police searched Zhong’s Gainesville home, they discovered 50,676 Bitcoin, which had a market worth of $3.36 billion at the time.

Following the $3.6 billion in bitcoin taken in connection with the 2016 breach of cryptocurrency exchange Bitfinex, the raid saw the second-largest cryptocurrency seizure.

Zhong entered a guilty plea to one count of wire fraud, which carries a potential 20-year jail term. On February 22, 2023, he is expected to get a sentence.

According to Lt. Shaun Barnett of the Athens, Georgia police department, Zhong phoned the authorities in 2019 to “report a burglary.”

Zhong claimed having various valuables taken, including “a lot of bitcoin,” to the police while he was a resident of Athens, Georgia in 2019. This evidently caught the attention of the IRS Criminal Investigation (IRS-CI) team.

Although the money was never found and no suspect was ever apprehended, the burglary and the quantity of cash allegedly taken ‘raised a red flag with the IRS,’ according to Barnett.

After an investigation, a search warrant was executed, and in November 2021, the IRS-CI and the Athens police department made an arrest.

According to federal investigators, when they executed the search order at Zhong’s Georgia residence, the stolen Bitcoin was discovered.

The digital tokens were concealed in a “single board computer” that was kept in a restroom nearby Zhong’s house and concealed inside a popcorn tin.

Authorities also seized $662,000 in cash, physical Bitcoin coins, an 80 percent interest in a Memphis-based real estate investment company with substantial holdings, along with 11 1-ounce bars of silver and gold.

‘James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road,’ U.S. attorney Damian Williams said in a statement this week.

‘For almost 10 years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.’

Prosecutors said Zhong executed a scheme to defraud ‘Silk Road’ dark web marketplace. They said he made nine accounts September 2012 and would then flood the site with withdrawal requests, which tricked the site into giving him multiples of what he had deposited.

After doing this 140 times, he had withdrawn all of the site’s cryptocurrency holdings. He then transferred the Bitcoin into separate accounts to keep it from being detected.

Silk Road is an online black market used to distribute illegal drugs and goods to buyers, according to the U.S. Attorney.

‘Mr. Zhong executed a sophisticated scheme designed to steal bitcoin from the notorious Silk Road Marketplace,’ Special Agent in Charge Tyler Hatcher said.

‘Once he was successful in his heist, he attempted to hide his spoils through a series of complex transactions which he hoped would be enhanced as he hid behind the mystery of the darknet.’