- Silk Road hacker James Zhong has been jailed for a year for stealing ₿50,000 from the site in 2012
- Zhong kept the bitcoin in various forms, alongside cash and precious metals, hidden in his house
- He was unmasked when he sold 50,000 BCH tokens following the 2017 hard fork
The Silk Road hacker who was last year found to be in possession of a haul of bitcoin, cash and other assets worth $3.36 billion has been sentenced to a year in prison. James Zhong, who pleaded guilty to wire fraud nine years after stealing more than ₿50,000 from Silk Road, was also ordered to hand over his stash of bitcoin, cash, and precious metals, which was hidden in various places around Zhong’s home. Zhong was unmasked when he sold 50,000 BCH tokens on a centralized exchange following the 2017 hard fork.
Zhong Tricked Silk Road Servers
In September 2012, Zhong defrauded Silk Road by creating a series of accounts and triggering over 140 rapid transactions to trick Silk Road’s payment system into releasing approximately ₿50,000 into his accounts. Zhong subsequently transferred the bitcoin into various addresses under his control, where they lay untouched for almost a decade.
Zhong’s actions would have gone unnoticed if he hadn’t decided to rid himself of the 50,000 Bitcoin Cash tokens that came his way as a result of the 2017 hard fork. Zhong sent the coins to an unnamed exchange and sold them, which proved to be his undoing: the Inland Revenue Service, working with blockchain analysis firm Chainalysis, was able to trace the coins to Zhong, and on November 9, 2021, law enforcement officials executed a premises search warrant where they discovered approximately 50,491 bitcoin at Zhong’s residence in Gainesville, Georgia.
Zhong Surrendered 1,004 More Bitcoin
The coins were found in an underground floor safe as well as on a single-board computer that had been concealed under blankets inside a popcorn tin stored in a bathroom closet. Additionally, the search yielded $661,900 in cash, 25 Casascius coins with an estimated value of ₿174, an additional ₿11.11, and gold and silver bars and coins. In March 2022 Zhong began surrendering additional bitcoin to the government, eventually handing over an extra ₿1,004 to the authorities.
United States District Judge Paul Gardephe imposed a prison sentence of one year and one day, while the seizure of the haul, today worth $1.57 billion, was also made official and will result in a government auction in the future.
