U.S. Department of Justice Seized $3.36 Billion Worth of Bitcoin Related to Silk Road Marketplace

According to a press release, the U.S. Department of Justice has confiscated approximately $3.36 billion in Bitcoin associated to Silk Road that has been missing since 2012. 

Property developer James Zhong, who stole 51,680.32473733 BTC from Silk Road, has admitted to committing wire fraud in order to obtain Bitcoin from the dark web marketplace.

U.S. Attorney Damian Williams explains that “for almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.”

From 2011 until 2013, Silk Road served as a marketplace where users could buy narcotics and other products and services that were difficult to find on regulated platforms. In 2015, Silk Road founder Ross Ulbricht was apprehended and sentenced to life in prison.

Williams said that tracking down Zhong was due to state-of-the-art cryptocurrency tracing along with “good old-fashioned police work.” He warns that “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.”

Zhong began a successful wire scam in September 2012 by opening at least nine fake accounts that simultaneously launched the Silk Road withdrawal procedure. This resulted in more than 140 transactions where a number of accounts quickly received the Bitcoin to then redistribute the funds to a number of BTC addresses.

When Zhong first opened an account, he would deposit somewhere between 200 and 2,000 BTC at a time. Within a matter of seconds after the deposit, he would execute multiple withdrawals to make it nearly impossible for the system to keep track of how many withdrawals were made.

Details from the report include:

• On November 9th, 2021 IRS-CI agents seized 50,491.06251844 Bitcoin of the approximately 53,500 Bitcoin Crime Proceeds.
• The Bitcoin was found in an underground floor safe as well as on a single-board computer that was covered by blankets in a popcorn tin stored in a bathroom closet. 
• Law enforcement was also able to recover $661,900 in cash, 25 Casascius coins (physical Bitcoin) with an approximate value of 174 Bitcoin, 11.116 additional Bitcoin, four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin.

Judge Gardephe will sentence Zhong on February 22nd, 2023.

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Deniz Saat

Deniz Saat is an IT services specialist, technical writer and editor for BTC Times. His mission is to onboard as many people as possible into the Bitcoin overlay through education and content creation.