In a previously undisclosed raid in 2021 on James Zhong's home, the U.S. Department of Justice reported on Monday that it had discovered approximately $3.36 billion worth of stolen bitcoin, according to a report by CNBC.
Zhong, who was accused of stealing Bitcoin from various crypto exchanges, pleaded guilty on Friday to one count of wire fraud, which has a maximum term of 20 years in jail.
Second-Largest Financial Seizure
When U.S. officials searched Zhong's home in Gainesville, Georgia, on November 9, 2021, they found roughly 50,676 bitcoin, which were then worth over $3.36 billion, according to the DOJ.
This marks the DOJ's second-largest financial confiscation to date, trailing its seizure of 3.6 billion in reported stolen cryptocurrency connected to the 2016 breach of the cryptocurrency exchange Bitfinex, which the DOJ revealed in February.
Authorities claim that Zhong stole bitcoin from the Silk Road dark web marketplace, where drugs and other criminal goods were bought and sold using Bitcoin.
Launched in 2011, Silk Road was shut down by the Federal Bureau of Investigation in 2013. Ross William Ulbricht, who founded it, is currently incarcerated for the rest of his life.
According to U.S . Attorney Damian Williams, the whereabouts of this large amount of missing Bitcoin has grown into a $3.3 billion mystery over the course of roughly ten years.
The Southern District of New York claims that Zhong carried out the hack by utilizing the market's flaws.
Zhong utilized a "sophisticated scheme," according to Special Agent in Charge Tyler Hatcher of the Internal Revenue Service's Criminal Investigation, to steal the bitcoin from Silk Road.
DOJ's press release noted that Zhong set up nine phony accounts on Silk Road in September 2012 and funded each one with 200-2,000 bitcoin.
The marketplace's withdrawal-processing system was duped into releasing almost 50,000 bitcoin into his accounts after he immediately started over 140 transactions. The bitcoin was subsequently moved by Zhong into several of his wallet addresses.
Law enforcement and blockchain analytic professionals were able to reclaim more than 50,000 bitcoin from Zhong thanks to blockchain analysis and g police work.
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Crypto Hacks
CNBC also noted that public documents showed that Zhong was the president and chief executive officer of JZ Capital LLC, a self-founded business that he incorporated in Georgia in 2014. His work there was mostly centered on "investments and venture capital," according to his LinkedIn page.
But even when the Silk Road closed down, these kinds of hacks continued. Criminals continue to have access to cryptocurrency platforms.
The largest cryptocurrency exchange in the world by trading volume, Binance, experienced a $570 million hack last October. According to the business, a smart contract flaw allowed hackers to take advantage of the BSC Token Hub cross-chain bridge.
Chainalysis report stated that $1.9 billion worth of crypto had been stolen via service hacks all throughout July 2022, as opposed to slightly under $1.2 billion in the same period last year.
This article is owned by Tech Times
Written by Jace Dela Cruz
