Authorities seize over $3 billion of stolen Bitcoin

By Dean Murray via SWNS

U.S authorities announced they seized $3.36 billion (£2.9 billion) of stolen Bitcoin - including some hidden in a popcorn tin.

The seizure last year from hacker James Zhong's Georgia home was the largest in history at the time.

The stash of 50,676 Bitcoin had been illicitly taken from an illegal darknet website in 2012.

Officials found the haul in an underground safe and hidden on a single-board computer under blankets in a popcorn tin stored in a bathroom closet.

In addition, law enforcement recovered $661,900 in cash, physical bitcoins, and gold and silver bars.

Zhong, 32, pled guilty on November 4 to one count of wire fraud, which carries a maximum sentence of 20 years in prison.

"James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road," said U.S. Attorney Damian Williams.

"For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.

"Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.

"This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”

IRS Criminal Investigation (IRS-CI) Special Agent in Charge Tyler Hatcher said: "Mr. Zhong executed a sophisticated scheme designed to steal bitcoin from the notorious Silk Road Marketplace.

"Once he was successful in his heist, he attempted 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.’

"IRS-CI Special Agents are the best in the world at following the money through cyberspace or wherever our financial investigations lead us.

"We will continue to work with our partners at the US Attorney’s Office to track down these criminals and bring them to justice."

Silk Road was an online “darknet” black market. In operation from approximately 2011 until 2013, Silk Road was used by numerous drug dealers and other unlawful vendors to distribute massive quantities of illegal drugs and other illicit goods and services to many buyers and to launder all funds passing through it.

In September 2012, Zhong executed a scheme to defraud Silk Road of its money and property by creating a string of approximately nine Silk Road accounts in a manner designed to conceal his identity; triggering over 140 transactions in rapid succession in order to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin from its Bitcoin-based payment system.

Zhong was able to transfer this Bitcoin into a variety of separate addresses, all in a manner designed to prevent detection, conceal his identity and ownership, and obfuscate the Bitcoin’s source.

The Zhong seizure was then the largest cryptocurrency seizure in the history of the U.S. Department of Justice and today remains the Department’s second largest financial seizure ever.

It was surpassed in February when more than $4 billion in stolen Bitcoin from the 2016 Bitfinex virtual currency exchange hack was confiscated.

In 2015, following a prosecution by the U.S. Attorney, Silk Road’s founder Ross Ulbricht was convicted by an unanimous jury and sentenced to life in prison.