The United States federal authorities have seized more than $3.3 billion worth of Bitcoin in an ongoing investigation into fraud involving the Silk Road dark web marketplace, they announced late on Monday.
It is not the first time the US government made a multi-billion dollar recovery of such kind in recent years, so it’s safe to say that the Internal Revenue Service (IRS) and its Criminal Investigations Department (IRS-CI) are having the time of their lives.
In a press release, the US Department of Justice (DOJ) calls the latest cryptocurrency seizure and conviction “historic.” According to experts, the announcement indeed signals the growing capability of the American government to successfully trace and recover cryptocurrency payments, connected to cybercrime.
So what happened? Prosecutors say that the stash of about 50,000 Bitcoin was seized late last year, then valued at more than $3.3 billion – this would make it the largest cryptocurrency seizure in DOJ history, even if the amount is now worth around $1 billion.
The giant Bitcoin trove was found during a November 2021 search of the defendant James Zong’s home in the state of Georgia.
Zhong pleaded guilty to wire fraud for tricking Silk Road’s processing system into releasing the funds to his accounts back in 2012. He is to be sentenced in February.
Some of the stolen Bitcoin was found in a popcorn can, stored in a bathroom closet, along with more than $600 million in cash and precious metals, the IRS said earlier.
“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from the Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” US Attorney Damian Williams said.
“Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds. This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”
Zhong is actually the second Silk Road hacker to give up a billion-dollar cache to the feds. An unnamed individual agreed last year to forfeit nearly 70,000 Bitcoin he had stolen from the shadowy drug market – this was worth even more than the stash at Zhong’s place.
Finally, both these records were still broken earlier this year by the case against two alleged money launderers in New York, accused of pocketing $4.5 billion in cryptocurrency stolen from the Bitfinex exchange.
The US government seized the Silk Road in 2013 and described this dark-web underground site as a massive illegal drug and money-laundering marketplace.
Silk Road creator Ross Ulbricht was convicted in 2015 of seven counts of enabling illegal drug sales via Bitcoin. He was sentenced to life in prison, ordered to pay $183 million in restitution, and lost an appeal in 2017.
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