Feds seize $3.36 billion in stolen bitcoin in wire fraud raid
Stolen bitcoin overview:
- Who: The U.S. Department of Justice announced that it seized $3.36 billion worth of stolen bitcoin from James Zhong in a previously unannounced raid last year.
- Why: DOJ says Zhong stole the bitcoin from the illegal and now-defunct Silk Road dark web marketplace.
- Where: Nationwide.
The U.S. Department of Justice announced on Monday that it seized $3.36 billion worth of bitcoin that was stolen more than 10 years ago from the illegal and now-defunct “Silk Road” marketplace.
The bitcoin seizure occurred during a raid last year on the residence of James Zhong, who pleaded guilty last week to one count of wire fraud in a charge that can carry a maximum of up to 20 years in prison, reports CNBC.
A total of around 50,676 bitcoin—valued at that time at more than $3.36 billion—were reportedly seized by the DOJ during a search of Zhong’s Gainesville, Georgia residence on Nov. 9, 2021, according to the agency.
Zhong is accused of stealing bitcoin from the illegal and now-defunct Silk Road marketplace, a forum on the dark web that was used to facilitate the sale of drugs and other illicit products bought and sold using cryptocurrency, reports CNBC.
FBI shut down Silk Road marketplace in 2013, founder in prison
The Federal Bureau of Investigations (FBI) shut down the Silk Road in 2013—two years after it was launched in 2011—with its founder Ross William Ulbricht currently serving a sentence of life in prison.
Zhong was able to steal bitcoin by creating fraudulent accounts on the Silk Road before tricking the marketplace’s withdrawal-processing system into releasing around 50,000 bitcoin into them, according to a special agent in charge of the investigation, reports CNBC.
Cryptocurrency platforms are vulnerable to bad actors who reportedly look to find vulnerabilities that can allow their systems to be exploited in attacks that can net hundreds of millions of dollars in losses.
In September, a federal judge in California dismissed a class action lawsuit accusing Apple of allowing a phishing app called Toast Plus on its App store that allegedly stole cryptocurrency from consumers.
