Key takeaways:
- According to the U.S. Attorney for the Southern District of New York, James Zhong received a one-year prison term for wire fraud concerning the theft of 50,000 BTC from the Silk Road.
- The offender kept his crimes and looted money a secret for more than ten years.
The U.S. Attorney’s Office for the Southern District of New York made public the sentence of a man who, in 2012, pleaded guilty to wire fraud charges relating to Bitcoin that was illegally bought via the Silk Road.
On April 14, the US Justice Department announced that James Zhong had been given a prison term of one year and one day for offenses related to the execution of a scheme to steal more than 51,680 Bitcoin. In November 2022, Zhong pleaded guilty to the charges; she is now awaiting sentencing. According to U.S. Attorney Damian Williams:
“Cyber-criminals should heed this message: we will follow the money and hold you accountable, no matter how sophisticated your scheme and no matter how long it takes.”
While making a withdrawal from the well-known black market drug website Silk Road in December 2012, James Zhong discovered a software flaw.
This website, which enables users to sell various goods, including illegal drugs, is known as the Amazon of the Underworld. Due to its high level of confidentiality and secrecy, Silk Road is known as a sanctuary for illegal activities.
Zhong traveled to Silk Road to buy cocaine when he was only 22 years old. Zhong noticed that after accidentally double pressing the withdraw button, users could withdraw twice as many Bitcoins as they had initially entered.
Federal authorities claim that after discovering the weakness, Zhong often created new accounts and stole 50,000 Bitcoins, totaling around $600,000, in a matter of hours.
Williams claims that Zhong stole the BTC in 2012 and concealed his crime for about ten years before being charged. Zhong’s Bitcoin holdings were taken by U.S. police from his Georgia house in November 2021. They found most cryptocurrency in a floor safe and a computer concealed inside a popcorn tin. The coins were worth about $3.4 billion at the time.
The Internal Revenue Service (IRS) claims that the United States has successfully prosecuted cases based on tracking currency transactions to seize more than $10 billion in cryptocurrencies in just the previous two years. Investigators can now analyze the blockchain and follow Bitcoin’s path rather than serving subpoenas on banks or other financial institutions.
