The largest amount of illegal funds ever recovered by federal law enforcement was found at the bottom of a Georgia man's linen closet.
A Georgia man hid more than a billion dollars in the digital currency for just under 10 years. The man in question, James Zhong from Georgia, is accused of pulling off a massive theft from the dark web drug marketplace Silk Road back in 2012 but kept the loot under some blankets in his bathroom. It was worth more than $3 billion when the feds took it over.
According to the U.S. Attorney's office, in September of 2012 when Silk Road was still going strong, Zhong hatched a plan to steal a few hundred thousand dollars in digital currency. The Silk Road system was blasted with over 140 transactions in less than a second, which resulted in the release of 51,680 bitcoins, according to prosecutors. He hid where it came from by running some of it through a mixer.
Tyler Hatcher, a special agent with the Internal Revenue Service's criminal investigation arm, said in the release that Zhong "tried to hide his spoils through a series of complex transactions which he hoped would be enhanced as he hid behind the mystery of the 'darknet.'" The funds that remained hidden for nearly a decade were found using a combination of tracing and police work. There have been other investigations that have been able to track these transactions through wallet transfers and user activity.
The man pleaded guilty on the 4th of November. He was released on bail the same day. Along with all the digital assets seized by federal law enforcement, authorities also took around $661,900 in cash and some silver and gold bars from his safe. He was forced to give up some of his interest in the company.
It was still in its infancy at that time. At the end of the year, the price of the world's most popularcryptocurrencies was $13.45. His robbery was only half a million dollars in the virtual currency. In the past few years, a few hundred thousand have become billions. James Howells from the UK has tried many times to recover lostbitcoin from a landfill he mined back in the early days of the digital currency.
Up to 20 years in prison is what the charges of wire fraud mean. Michael Bachner, an attorney from New York, told Gizmodo that he was remorseful for his conduct when he was a young man. Mr. Zhong returned most of the money he spent on the digital currency. The value of thebitcoin he returned was more than the value he took.
A single board computer that was disconnected from the internet was found in an underground safe under blankets in a bathroom closet, according to the feds. Zhong received an identical amount of the newcryptocurrencies, which were established after the hard fork, as well as the old one, which he kept in his private wallet. According to the release, the man surrendered a small amount of the virtual currency.
According to the U.S. Attorney's Office, because Silk Road founder Ross Ulbricht was convicted of operating the drug selling operation in 2015, the federal government is making a motion to seize Zhong's digital currency. Despite the loss of Silk Road, there are other dark web operations and larger schemes still trying to make money off anonymous transactions.
As of late, other heists have targeted Defi projects and cross chain bridges, often squirreling away thousands or millions of dollars in the process, making the original 2012 theft look like a lemonade stand robbery.
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