The U.S. Department of Justice (DOJ) said it seized $3.36 billion in stolen bitcoin assets—the second-largest recovery on record. The cryptocurrency haul was taken in 2021 from the home of a crypto hacker in the U.S. who “unlawfully obtained” more than 50,000 bitcoin (BTC) from the now-defunct illegal dark-web market Silk Road more than a decade ago.
James Zhong, of Gainesville, Georgia, pleaded guilty Nov. 4, 2022, to one count of wire fraud, and faces a maximum sentence of 20 years in prison.
Feds Seize BTC Linked to Defunct Marketplace
DOJ on Nov. 7, 2022, announced the huge November 2021 Bitcoin recovery and said the coins were linked to a “sophisticated scheme” to steal from the now-defunct Silk Road marketplace. The Federal Bureau of Investigation (FBI) shut down the site in 2013 and arrested its owner, Ross Ulbricht, who was later sentenced to life in prison.
In November 2020, the U.S. government also seized $1 billion worth of bitcoin linked to the site, but the latest haul of 50,676 BTC was taken from bitcoin wallets linked to Zhong. The digital assets were found hidden on various devices in his home in an underfloor safe and inside a popcorn tin.
“For almost 10 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 a DOJ press release.
Hacks Have Continued After the Dark Web
The latest recovery of stolen cryptocurrency follows the announcement of the largest Bitcoin seizure to date in February 2022. DOJ at that time said it had seized more than $3.6 billion linked to the 2016 hack of the Bitfinex exchange.
Despite the closure of the Silk Road marketplace and tighter scrutiny from regulators and federal agencies, large crypto hacks have continued to tarnish the outlook for the cryptocurrency sector. In an August 2022 report, blockchain data provider Chainalysis said that more than $1.6 billion worth of cryptocurrency had been stolen up to that point in 2022. That was followed by a further high-profile hack on Oct. 6, when $570 million was taken from the Binance exchange.
The Bottom Line
Federal agents’ newly announced second-largest all-time Bitcoin seizure in 2021 was linked to the now-defunct Silk Road dark-web marketplace. Despite the closure of these illegal sites, hackers are still finding ways to exploit cryptocurrency platforms, so that remains a hurdle for broad institutional adoption of digital currencies.
