The U.S. federal prosecutor’s office has returned $3.36 billion in bitcoin that was stolen ten years ago from the Silk Road dark web marketplace.
Funds seized from 32-year-old James Zhong from Georgia. He pleaded guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison.
James Zhong is said to have committed an electronic communications scam over 10 years ago (September 2012) when he stole about 50,000 bitcoins from Silk Road. To implement his plan, Zhong created about nine Silk Road accounts and made initial deposits of 200 to 2000 bitcoins to them. Zhong then initiated 140 transactions in rapid succession to trick Silk Road’s withdrawal processing system into transferring about 50,000 bitcoins to his accounts. At that time, the value of these assets was about $650,000.
“For example, on September 19, 2012, Zhong deposited 500 bitcoins to the Silk Road wallet,” prosecutors said. “Less than five seconds after making the initial deposit, Zhong completed five withdrawals of 500 bitcoins in quick succession, that is, within one second, resulting in a net profit of 2,000 bitcoins.”
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In another fraudulent account, Zhong made one deposit and over 50 withdrawals before the account was suspended. Within days of the transactions, Zhong withdrew the bitcoins from Silk Road and combined them into two large sums.
After committing the theft, Zhong “tried to hide his loot with a series of complicated transactions.” However, “thanks to state-of-the-art cryptocurrency tracking and good old-fashioned policing, law enforcement discovered and recovered” these crypto assets. The fact is that the bitcoin blockchain provides a history of every single transaction that forensics can use to trace stolen coins, even as they go through various tools designed to hide their origin.
When the Bitcoin hard fork took place in August 2017, Zhong received a windfall of 50,000 in Bitcoin Cash. Zhong used an overseas exchange to convert Bitcoin Cash into approximately 3,500 Bitcoins, bringing his total to approximately 53,500 Bitcoins. Starting this year, Zhong began voluntarily handing over a little over 1,004 bitcoins to the federal authorities.
The Silk Road site operated from 2011 to 2013 and was used to trade illegal goods around the world. Platform founder Ross Ulbricht was sentenced to life in prison in 2015.
Source: arstechnica
