A Georgian man who stole more than 50,000 Bitcoins from the Silk Road marketplace in 2012 has been sentenced to one year in prison.
In a press release Friday, the US Department of Justice said James Zhong had been sentenced to one year and one day in prison on charges related to executing a scheme to steal more than 51,680 Bitcoins from drug trafficking site Silk Road.
The DOJ noted that Zhong had been charged with one count of wire fraud for illegally obtaining approximately 50,000 Bitcoins from the dark web internet marketplace Silk Road. According to federal agencies, in 2021, US police searched Zhong’s home in Gainesville, Georgia, and found approximately 50,676 bitcoins worth more than $3.36 billion.
Notably, the foreclosure was not announced until November last year, when the DOJ finally revealed that it had found approximately $3.36 billion in stolen bitcoins during a sudden raid in 2021 on James Zhong’s home.
With Bitcoin trading around $11 in 2012, the stolen BTC stash was worth around $600,000 at the time of the theft. However, when authorities seized the device holding the stolen Bitcoins in November 2021, their value exploded, making it the second largest financial seizure in US history.
Zhong has entered a guilty plea to one count of wire fraud, which carries a maximum penalty of 20 years in prison. Prior to his arrest, Zhong spent $16 million of the stolen BTC on real estate investments, luxury hotels, nightclubs and Lamborghinis, prosecutors said.
“Cybercriminals should heed this message: we will follow the money and hold you accountable, no matter how sophisticated your scheme is and no matter how long it takes,” US Attorney Damian Williams said.
Meanwhile, prosecutors have asked the judge to give him less than two years in prison, citing his youth, autism, and his assistance in recovering stolen crypto.
She was “extremely bullied and victimized by her colleagues because she was different – she was extremely shy, overweight, and most significantly, suffered from an undiagnosed autism spectrum disorder,” Zhong’s attorneys said in court documents.
Zhong Stole 50,000 BTC Using a Simple Mistake
It should be noted that Zhong did not use sophisticated hacking techniques to steal funds, but instead used a simple error on the Silk Road website. Zhong, who kept some Bitcoins at Silk Road, mistakenly double-clicked the withdrawal button, which resulted in two withdrawals.
Next, he deposited more tokens and quickly withdrew them, double-clicking each time.
In their sentencing memo, Zhong’s lawyers argue that he does not own rights to the stolen Bitcoins, but neither does Silk Road. They said the market was not a victim “in any real sense” under the law, noting that imprisoned Silk Road founder Ross Ulbricht contacted Zhong and asked him how he took cryptocurrency.
The Silk Road marketplace, dead for approximately 10 years, allowed users to buy and sell prohibited items such as weapons and stolen credit card information using Bitcoins. Ross Ulbricht, the platform’s creator, was arrested for his role in 2013 and is currently serving two life sentences with no possibility of parole.
