Silk Road Hacker Sentenced to a Year in Prison for Wire Fraud

On April 14, 2023, the Department of Justice (DOJ) for the Southern District of New York revealed that the hacker liable for the Silk Road marketplace breach had been sentenced to a twelvemonth successful situation for ligament fraud charges. James Zhong stole much than 50,000 bitcoin from the darknet marketplace (DNM) successful September 2012. DOJ lawyer Damian Williams stated that Zhong had utilized a bitcoin mixing service, an planetary cryptocurrency exchange, and “an awesome array of technological tools to frustrate tracing efforts.”

Officials Seize Bitcoin, Precious Metals, and Firm With Ties to Substantial Real Estate successful Silk Road Investigation

After a tribunal filing detailed the U.S. government’s intentions to merchantability 41,000 seized bitcoin (BTC) this calendar twelvemonth and the merchantability of 9,861.1707894 BTC that occurred connected March 14, 2023, James Zhong was sentenced to a twelvemonth successful situation by U.S. District Judge Paul G. Gardephe, arsenic revealed by New York’s DOJ.

Zhong had utilized an elusive strategy to bargain from the Silk Road DNM, creating 9 Silk Road accounts and triggering 140 transactions that tricked the DNM’s withdrawal strategy into releasing 50,000 BTC to addresses nether his control.

Interestingly, Zhong ne'er utilized Silk Road for its intended purpose, and the fake accounts were created solely for the intent of executing the hack. Investigators estimation that it took astir 200 to 2,000 BTC to get a nett full of implicit 50,000 BTC.

Pictures from the James Zhong investigation, according to the Southern District of New York Department of Justice.

In addition, years later, Zhong obtained 50,000 bitcoin currency (BCH) erstwhile Bitcoin was forked successful August 2017, and helium exchanged each the BCH utilizing an overseas cryptocurrency speech for 3,500 BTC aft the fork. The funds were discovered astatine Zhong’s residence successful Gainesville, Georgia, successful an underground level harmless submerged successful blankets and a Cheetos popcorn tin.

Federal authorities seized astir 51,351.89785803 bitcoin connected 3 abstracted occasions, a stash of precious metals, and $661,900 successful cash. Additionally, officials took Zhong’s 80% involvement successful RE&D Investments, a Memphis steadfast with important existent property holdings.

The 32-year-old Zhong pleaded blameworthy to ligament fraud, and speech from New York’s DOJ, the lawsuit progressive the Internal Revenue Service (IRS), the Criminal Investigation’s Western Cyber Crimes Unit of the Los Angeles Field Office, and the Athens-Clarke County Police Department.

What bash you deliberation the implications of this lawsuit volition beryllium for aboriginal cryptocurrency-related crimes? Share your thoughts astir this taxable successful the comments conception below.

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