DIGITAL CONTENT CREATOR

The U.S. Department of Justice (DoJ) announced on Monday, October 7, 2022, the seizure of 50,676 Bitcoin stolen in the hack of the no-longer-existent Silk Road dark web marketplace. The cryptocurrency stolen in 2012 was valued at $3.36 billion at the moment of discovery and now is worth $1.04 billion.

This seizure was then the largest in the history of the DoJ at that date, and it still remains the Department’s second-largest financial seizure ever, after $3.6 billion worth of bitcoin was confiscated this February related to the 2016 Bitfinex breach.

The DoJ Operation

The DoJ operation took place on November 9, 2021, at the house of James Zhong located in Georgia, U.S.

In addition to the 50K Bitcoin, IRS-CI agents recovered $661,900 in cash, 25 Casascius coins with an approximate value of 174 Bitcoin, and gold- and silver-colored bars. The DoJ report also mentioned “a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet”.

James Zhong, who is 32-year-old, pleaded guilty on November 4, 2021, to committing wire fraud by stealing cryptocurrency from Silk Road. The maximum sentence for him can be of 20 years in prison.

Beginning in or around March 2022, Zhong began voluntarily surrendering to the Government additional Bitcoin that Zhong had access to and had not dissipated. In total, Zhong voluntarily surrendered 1,004.14621836 additional Bitcoin.

Source

The Silk Road Hack

“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.”, said U.S. Attorney Damian Williams.

The hacker defrauded the dark Web marketplace in September 2021 when he created nine fraudulent accounts on the platform in order to trigger 140 transactions with a total of 50,000 Bitcoin. Then he transferred the cryptocurrency to numerous wallets owned by him.

While each of the nine accounts had an initial deposit that ranged anywhere between 200 and 2,000 Bitcoin, Zhong is estimated to have made a series of withdrawals in rapid succession with the goal of tricking Silk Road’s processing systems into releasing more crypto than was originally deposited.

Source

Furthermore, when bitcoin began experiencing a major overhaul in 2017, Zhong received 50,000 Bitcoin Cash, which he then exchanged for an additional 3,500 Bitcoin.

Silk Road was a marketplace on the darknet where illegal transactions took place. It was opened in February 2011 and prospered until 2013, when it was taken down.

Ross William Ulbricht, the founder, was sentenced to life in prison in 2015, and Gary Davis, one of the market’s administrators, received a six-and-a-half years sentence in July 2019.

If you liked this article, follow us on LinkedInTwitterFacebookYouTube, and Instagram for more cybersecurity news and topics.

Russian Darknet Marketplace Hydra Shutdown by The US DOJ

How to Get on the Dark Web: A Step-by-Step Guide

Deep Web vs. Dark Web: What is Each and How Do They Work

Leave a Reply

Your email address will not be published. Required fields are marked *

GO TO TOP