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The US Attorney’s Office seizes billions of dollars in Bitcoin linked to Silk Road

The Department of Justice (DOJ) said on Monday that more than $3.36 billion in Bitcoin was linked to the dark web marketplace Silk Road. Using the wallet addresses discovered, investigators were able to link the guy the DOJ said pled guilty to the theft of around 50,676 bitcoins to a figure from the earliest days of cryptocurrencies.

Silk Road hacker James Zhong may be the same persona as “Loaded,” who posted 135 posts as a “Bitcoin multimillionaire, broker, and asset manager” on BitcoinTalk from November 2012 to March 2017.
Ten years ago, in 2008, the price of one bitcoin was about $10.

Federal prosecutor Damian Williams claims that James Zhong committed wire fraud more than a decade ago by stealing about 50,676 Bitcoin from the Silk Road online marketplace. After over a decade, the location of this massive number of lost BTC remains a $3.3 billion mystery.

Tracing method used by US officials

Williams said that “state-of-the-art cryptocurrency tracking” and “good old-fashioned police work” were responsible for the authorities’ success in finding and retrieving the stolen BTC.

Agents from the Internal Revenue Service found more than 11 Bitcoin, $661,900 in cash, 25 Casascius coins worth approximately 174 Bitcoin, more than 50,491 Bitcoin in a floor safe, and a single-board computer buried under blankets in a popcorn tin during a search of Zhong’s house.

In September 2012, Zhong was said to have employed a trading approach to steal Bitcoins from the Silk Road bazaar without selling or buying anything.

The black market was extensively used to sell illicit narcotics and other things until its inventor, Ross Ulbricht, was sentenced to life in jail in 2015.

Silk Road against the missing Bitcoins

The DOJ claims that Zhong used over 140 consecutive transactions to trick the Silk Road withdrawal processing system into sending 50,000 bitcoin to his various accounts.

Zhong allegedly doubled his stolen BTC holdings five years later by hanging onto Bitcoin Cash (BCH), a hard-forked version of BTC designed for improved scalability. Afterward, he allegedly sold that BCH on a foreign crypto exchange for an extra 3,500 Bitcoin, as stated in a statement released by the DOJ.

Although Bitcoin addresses are anonymous, the history of every transaction can be seen on the public ledger known as the blockchain. Since this is the case, intelligence agencies may utilize cutting-edge techniques to track down the mint that produced the coins.

If convicted of wire fraud, Zhong faces up to 20 years in jail. He will likely be given a sentence in February 2023. Compared to the 94,000 Bitcoins recovered following the 2016 Bitfinex incident, this is the 2nd largest Bitcoin seizure in DOJ history.

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