Crypto

Justice Department Reveals Massive $3.36 Billion Crypto Seizure

The Department of Justice (DOJ) on Monday announced a massive seizure of stolen bitcoins from the now-shutdown online marketplace Silk Road, and the sentencing of the person the agency says took the cryptocurrency.

About a year ago, authorities seized approximately $3.36 billion worth of stolen bitcoin, marking the “second-largest financial seizure ever by the DOJ.” according a release from the agency. The more than 50,600 bitcoins had been illegally obtained years ago by James Zhong, who the DOJ said pleaded guilty on Friday to a wire fraud charge.

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According the GMZhong committed the wire fraud in September 2012, when he tricked Silk Road’s withdrawal processing system into releasing bitcoin to nine accounts he had created in the illicit market. He tricked the system by making initial bitcoin deposits and then executing withdrawals “in rapid succession”, the agency said.

Bitcoins are seen in this illustration photo taken on September 27, 2017. (Reuters/Dado Ruvic/Illustration/Reuters Photos)

The Department of Justice (DOJ) announced on Monday, November 7, 2022 a massive seizure of stolen bitcoins from the now closed Silk Road online marketplace. (Chesnot/Getty Images/Getty Images)

He then moved the bitcoin to different addresses in an effort to “prevent detection, conceal his identity and ownership, and obscure the source of the bitcoin,” the DOJ statement said.

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Years later, in November 2021, Internal Revenue Service, Criminal Investigations agents recovered nearly 50,500 bitcoins of the total “proceeds of crime” of an “underground safe” and a “single board computer” hidden in a popcorn box inside a bathroom closet in his Georgia home, according to the DOJ statement.

bitcoin-cryptocurrency-trading

Bitcoin was trading above $42,300 early on Monday morning, November 7, 2022, as the cryptocurrency market was down overall. (iStock/iStock)

“For nearly a decade, the whereabouts of this massive missing piece of Bitcoin has exploded into a $3.3 billion+ mystery,” U.S. Attorney Damian Williams said in a statement. “Thanks to cutting-edge cryptocurrency tracing and good old-fashioned policing, law enforcement located and recovered this impressive cache of proceeds of crime.”

Zhong’s sentencing should take place on February 22. He faces up to 20 years in prison on the single wire fraud count, the DOJ said.

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