By Nick Watson
The Times, Gainesville, Ga.
GAINESVILLE, Ga. — A Gainesville man pleaded guilty in New York federal court to stealing more than 50,000 Bitcoin worth billions of dollars from the dark web marketplace known as Silk Road, according to court officials.
James Zhong, 32, pleaded guilty Friday, Nov. 4 to wire fraud, and he faces up to 20 years in prison when sentenced in February.
The 50,676 Bitcoin seized from Zhong’s Gainesville home was valued then at more than $3.36 billion, which was at the time the largest cryptocurrency seizure in Department of Justice’s history.
The dark web or darknet is a part of the internet not accessible by normal search engines.
The Silk Road was a darknet black market in the early 2010s, where drugs and other illegal goods and services were sold.
The U.S. Attorney’s Office in the Southern District of New York said Zhong set up nine Silk Road accounts in September 2012 to trigger more than 140 transactions “rapid succession in order to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin from its Bitcoin-based payment system into Zhong’s accounts.”
In November 2021, IRS agents recovered 50,491 Bitcoin from Zhong’s home in Gainesville in an underground floor safe and a computer “that was submerged under blankets in a popcorn tin stored in a bathroom closet,” according to the U.S. Attorney’s Office.
Agents also seized $661,900 in cash, 25 tangible Bitcoin coins worth 174 Bitcoin, gold- and silver-colored bars and a gold-colored coin.
In March, Zhong surrendered another 1,004 Bitcoin.
” James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road,” U.S. Attorney Damian Williams said in a news release. “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.”
Zhong is represented by attorneys Michael Bachner, John Garland, Don Samuel and Amanda Clark-Palmer.
Bachner said in a statement that his client is “extremely remorseful” for his conduct when the man was 22 years old.
” Mr. Zhong returned virtually all of the bitcoin he improperly acquired,” Bachner said in a statement. “
“Ironically, given the increase in bitcoin value over the last decade, the value of the bitcoin he returned exponentially exceeded the value of the bitcoin he took.”
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