The November 2021 raid into the hacker James Zhong’s residence, which was previously unannounced, resulted in the seizure of over 50,000 bitcoin, stashed in a device hidden under a popcorn tin.
“For almost ten years, the whereabouts of this massive chunk of missing bitcoin had ballooned into an over $3.3 billion mystery,” U.S. Attorney Damian Williams said in the statement.
The seized funds would now be worth about $1.1 billion.
This constitutes the Justice Department’s second largest cryptocurrency seizure to date, following its seizure of $3.6 billion in allegedly stolen crypto this February linked to the 2016 hack of virtual currency exchange, Bitfinex.
The hacker, James Zhong, pleaded guilty on Friday to committing wire fraud, which carries a maximum sentence of 20 years in prison. He awaits sentencing.
According to Monday’s statement, Zhong stole the bitcoins in 2012 from Silk Road, a darknet marketplace where drugs and other illicit goods and services were bought and sold using cryptocurrency.
“Mr. Zhong executed a sophisticated scheme designed to steal bitcoin from the notorious Silk Road Marketplace,” IRS Criminal Investigation special agent Tyler Hatcher said in Monday’s press release.
There, still in the early days of bitcoin, Zhong set up several accounts to trick the black market forum’s withdrawal system into releasing 50,000 bitcoin into his fraudulent accounts.
Zhong then transferred the illicit proceeds into separate addresses with ties to him, as to obfuscate the funds’ source, conceal his ownership and identity, and stay under the radar.
Silk Road was shut down the next year by the FBI, and its founder sentenced to a life in prison in 2015.
