The U.S. Department of Justice announced last year that it had seized some 50,676 Bitcoin worth $3.36 billion that were stored on a circuit board hidden in the bottom of a popcorn tin in a bathroom closet that was stolen from a notorious darknet website.
In 2012, James Zhong, 32, from Georgia, fraudulently purchased Bitcoin from The Silk Road, a darknet website once known as the “Amazon of drugs,” and pleaded guilty to stealing money from the illegal Silk Road marketplace in 2012.
“Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from the Silk Road. For almost 10 years the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” said US Attorney Damian Williams.
From around 2011 to 2013, Silk Road was used by numerous drug traffickers and other illegal vendors to distribute vast quantities of illegal drugs and other illegal goods and services to a large number of buyers, while laundering all the money that flowed through them.
The theft occurred at the same time as the value of Bitcoin peaked; the funds seized today are worth about $1.1 billion. Zhong initially deposited between 200 and 2,000 Bitcoin into the fraudulent accounts. After the initial deposit, he quickly made a series of withdrawals.
He set up several accounts on the darknet marketplace in September 2012 and deposited a small amount of Bitcoin in his digital wallets. He then developed a method for quickly withdrawing much larger sums without arousing suspicion. His deception enabled him to withdraw many times more Bitcoin from the Silk Road than he had ever deposited.
He now faces a maximum sentence of 20 years in prison.
The sources for this piece include an article in BBC.