On Monday, November seventh, 2022, the U.S. Division of Justice introduced the seizure of $3.36 billion of Bitcoin by from a home in Gainesville, Georgia.
James Zhong, a 32-year-old pc graduate, unlawfully obtained over 50,000 Bitcoin from Ross Ulbricht’s Silk Highway market on the Darkish Internet greater than a decade in the past and hid it in units inside his house.
On November 4th, nearly a yr after the seizure, Zhong lastly pled responsible to committing wire fraud in 2012 and has agreed to assist prosecutors entry the remaining cash and supply the technical help to take action.
In your data, in November of 2021, authorities seized greater than 50,676 Bitcoin faraway from digital units in defendant Zhong’s house.
In what was the biggest cryptocurrency seizure on the time (surpassed by the 70,000 Bitcoin seized in relation to a Bitfinex hack in February), investigators performed a raid on Zhong’s home and located roughly 50,676 Bitcoin in November final yr, then valued at over $3.36 billion. Now, nonetheless, they’re value $1.04 billion for the reason that digital foreign money dropped from buying and selling at over $60,000 to round $21,000.
It’s value noting that in November 2020, in one other investigation, the Feds seized $1 billion in Bitcoin linked to the Silk Highway market after figuring out 54 undetected cryptocurrency transactions linked to the seized market.
Together with the Bitcoin which was present in an underground protected and a single-board pc in a popcorn tin underneath a pile of blankets in Zhong’s rest room closet, regulation enforcement additionally recovered $661,900 in money, 25 Casascius cash, a further 11.116 Bitcoin, and silver, and gold-colored bars.
As a part of his plea settlement, he additionally signed over his 80% stake in RE&D Investments, LLC, a Memphis-based firm with substantial actual property holdings. Court docket data present that Zhong studied pc science on the College of Georgia earlier than becoming a member of the true property market and beginning his personal firm, RE&D Investments.
In 2012, when Zhong was simply 22 years outdated, he executed a scheme to defraud Silk Highway, a infamous darkish internet market notorious for the distribution of unlawful medicine and cash laundering.
By making a string of accounts and triggering over 140 transactions in fast succession, he tricked Silk Highway’s withdrawal-processing system into releasing roughly 50,000 Bitcoin which he then transferred into quite a lot of separate addresses underneath his management.
On the time of committing wire fraud, Zhong didn’t checklist on the market or purchase any merchandise or service on Silk Highway, and even whereas he registered the accounts, he did so by offering the naked minimal data required, thus planning the scheme in a fashion designed to forestall detection, conceal his identification and possession, and obfuscate the Bitcoin’s supply.
Within the DoJ’s press launch, Damian Williams, U.S. Lawyer for the Southern District of New York mentioned:
“Because of state-of-the-art cryptocurrency tracing and good old style police work, regulation enforcement situated and recovered this spectacular cache of crime proceeds.” […] “This case exhibits that we received’t cease following the cash, irrespective of how expertly hidden, even to a circuit board within the backside of a popcorn tin.”
The founding father of Silk Highway, the then-anonymous “Dread Pirate Roberts” later uncovered as Ross Ulbricht, was unanimously convicted by a jury in 2015 of seven felony counts and sentenced to life in jail. The cash stolen by Zhong have been proceeds stemming from Ulbricht’s crimes which meant that he had no sufferer restitution to pay, based on his plea settlement.
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