Ten years ago, Silk Road was hacked. Exploiting a loophole, a hacker stole more than 50,000 bitcoins from the dark web’s black market, considered the eBay of drugs. After a long investigation, this impressive cryptocurrency treasure was finally found… at the bottom of a popcorn box.
The United States Department of Justice announces that it has seized more than 50,676 bitcoins in November 2021. During this seizure, the loot was still worth more than $3 billion. At the end of last year, the price of Bitcoin kept hovering above the $60,000 threshold. A year later, the value of the seized bitcoins has decreased by three. Currently, the queen of cryptocurrencies fluctuates about 20 thousand dollarswell off last year’s all-time high.
Anyway, that’s it the second largest cryptocurrency seizure carried out by US authorities. At number one, we find the operation targeting the couple formed by Heather Morgan and her husband, Ilya Lichtenstein, last February. After a lengthy investigation and several twists and turns, the police managed to recover 95,000 bitcoins. These coins had disappeared during the hack of the Bitfinex exchange platform in 2016.
Bitcoin stolen from Silk Road in 2012
As the American justice clarified, the bitcoins seized last November were discovered during the search of James Zhong, a 32-year-old who lives in the state of Georgia. The booty was stored on multiple devices. Law enforcement found a motherboard in an underfloor safe and in a popcorn box hidden in a bathroom cabinet. In the safe, police also discovered $600,000 in cash and precious metals.
Apparently, James Zhong got hold of these bitcoins in 2012. At the age of 22, he managed to seize some of the cryptocurrencies belonging to him Silk Road, the dark web’s most notorious black market. of mARkETS it is allowed to buy anything and everything with Bitcoin, such as weapons or drugs. The Silk Road was closed in 2013 after the arrest of its founder, Ross Ulbricht. He was convicted of seven charges two years later life imprisonment.
To collect the cryptocurrencies held by Silk Road, James Zhong has developed a clever trick. The young man opened nine fake profiles on the platform. These accounts were funded with a handful of bitcoins. Each profile had between 200 and 2000 bitcoins.
” Mr. Zhong devised a sophisticated plan to steal bitcoins from the infamous mARkETS The Silk Road. After committing his robbery, he tried to hide his loot through a series of complex transactions. “, explains Tyler Hatcher, the agent in charge of the theft investigation.
Then, James Zhong operated a security breach of the Silk Road. Making up to 140 transactions in a very short time, he convinced the market withdrawal system to pay him 50,000 bitcoins in various digital wallets. To cover his tracks, he quickly transferred the stolen tokens to other addresses. The operation lasted no more than a few minutes.
At the time of the theft, the price of Bitcoin did not exceed $13. Taking advantage of the boom in the crypto-asset market, the thief piled on a real asset. To increase his assets, Zhong has also taken advantage of the emergence of Bitcoin Cash. During the 2017 blockchain split, the cybercriminal received 50,000 Bitcoin Cash. These tokens, sent automatically to BTC holders, were exchanged directly for traditional Bitcoin, which helped inflate the Silk Road hacker’s fortune.
After doing well, the young pirate invested in real estate. At the same time, he stood out for his conspicuous lifestyle. On social networks, he regularly appeared on private luxury yachts. However, he refrained from withdrawing most of his winnings to avoid attracting the attention of the financial authorities.
Despite the precautions taken by the hacker, the police succeeded trace stolen bitcoins consulting the blockchain, the press release said. Blockchain actually keeps track of all transactions made, which eases the task of the authorities.
“For nearly a decade, the whereabouts of this massive missing piece of Bitcoin has been a $3.3 billion mystery. Using state-of-the-art cryptocurrency tracking and good old-fashioned police work, law enforcement has located and recovered this impressive criminal treasure.”says Damian Williams, the prosecutor in charge of the case.
According to our colleagues from prototypesthe police mostly caught the thief as a result ofa call made in 2019. That year, James Zhong contacted the police to report a burglary at his home. He mentioned that many properties were stolen, including “too many bitcoins”. This statement has aroused the interest of investigators, reports prototypesciting the clarifications given by the Ministry of Justice.
The hacker also made the mistake of exchanging some of his stolen bitcoins through an exchange. This is how the police were able to connect the identity of the thief with the cryptocurrencies that disappeared in 2012.
20 years in prison for eBay pharmacy hack
Arrested by police last year, James Zhong pleaded guilty to television fraud at a recent hearing. He faces up to 20 years in prison. However, it is highly likely that his lawyer will manage to spare him this maximum sentence.
Since his arrest, Zhong has indeed cooperated with investigators. He also paid 860 additional bitcoins the US government last March.
“Mr. Zhong returned almost all of the Bitcoin he had mistakenly purchased. Ironically, given the rise in value of Bitcoin over the past decade, the value of the bitcoins he returned exponentially exceeded the value of the bitcoins he stole. explains Michael Bachner, the pirate’s lawyer, asking for leniency from the courts.
According to his lawyer, the man who robbed Silk Road is also consumed by remorse. The decision will be made in February 2023.