Just-In: Silk Road Thief Who Stole 50,000 Bitcoin Gets 1 Year Jail Time

Pratik Bhuyan
April 15, 2023
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silk road thief

As announced by the U.S. Attorney’s office for the Southern District of New York, a defendant who pleaded guilty to wire fraud charges related to “unlawfully obtained” Bitcoin (BTC) from the Silk Road marketplace has been finally been sentenced. The 32-year-old James Zhong stole more than 50,000 BTC from the infamous drug-trafficking site back in 2012 when BTC was worth around $12.

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Second Highest Bitcoin Heist

According to reports, Zhong was able to hide his theft for about ten years before being apprehended. However, in November 2021, American officials raided Zhong’s home in Georgia and seized all Bitcoin assets, discovering the majority of the digital currency in a floor safe and a computer hidden inside a popcorn tin. At the time, the value of the cryptocurrencies was around $3.4 billion, making it the second-largest financial seizure in US history.

The prosecutors claim that Zhong spent nearly $16 million of the revenues on investments in real estate, luxury hotels, lavish pubs, nightclubs, and in owning a fleet of Lamborghinis. Considering today’s Bitcoin price, the confiscated asset is now estimated to be around $1.56 billion.

Read More: Elon Musk Launches New AI-Driven Company, Calls It X.AI

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Exploiting Silk Road’s Flaw

Zhong reportedly took advantage of an inherent flaw in Silk Road’s wallet feature which eventually led him to multiplying his Bitcoin stack. The U.S. Department of Justice notes that in one instance, Zhong transferred 500 bitcoins into a wallet and within five seconds made five quick withdrawals. By doing so, he exploited a weakness in Silk Road’s system, which resulted in his initial investment turning into 2,500 Bitcoins.

Additionally, Zhong enjoyed the hard fork split that occurred in 2017 between Bitcoin and Bitcoin Cash (BCH), were he received and equivalent amount of 50K BCH as well.  Apart from the 50K Bitcoins, the law enforcement were also able to seize nearly $662,000 in cash, 25 Casascius coins and metal coins which represented physical Bitcoins but in reality contained private keys to gain access to the real virtual currency.

Also Read: This SEC Commissioner Wants To Redefine ‘Exchange’; Will It Save Crypto In US?

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now - he has seen it all.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.