(RoyalPatriot.com )- The Department of Justice made a major announcement early this week, revealing a major takedown of a man using illicit funds on the dark web and a major seizure of cryptocurrency funds.
The man in question is James Zhong of Georgia, who pleaded guilty to wire fraud a full nine years after he originally stole more than 50,000 Bitcoins from the dark web drug exchange known as Silk Road.
Zhong reached a plea agreement in his case, forfeiting a huge stash of Bitcoins over to the DOJ. The coins were seized from Zhong late last year. At the time they were seized, they would’ve represented the largest seizure of currency of any kind in the history of the DOJ — not just the largest seizure of cryptocurrency.
While Bitcoin has dropped to a price around $16,000 this week — which still would’ve represented a massive seizure for the 50,000 Bitcoins — it peaked near $65,000 in early November 2021. The seizure at that time would’ve been valued at more than $3.25 billion.
Court records described that the Bitcoins were found on a “single-board computer” that was hidden in a popcorn can. In there as well were precious metals and more than $600,000 in cash, and it was all located in a safe that was under the floorboards in a closet in one of the bathrooms of Zhong’s home.
This is yet another recent huge accomplishment for the IRS Criminal Investigations division, which has been clamping down on illicit money transactions, specifically cryptocurrency.
The IRS-CI has been working in a partnership with Chainalysis, a firm focused on blockchain analysis, to trace cryptocurrency transactions in various ways. It has long been thought that cryptocurrency is completely untraceable, but the IRS-CI has been proving otherwise in recent years.
Zhong isn’t even the first person who hacked Silk Road who turned over a cache of Bitcoins valued at more than $1 billion to the IRS-CI. An unnamed person agreed in 2020 to forfeit almost 70,000 Bitcoins that he stole from the underground drug market. At the time, those coins were worth a total of around $1 billion, based on the exchange rate then.
On Monday, U.S. Attorney Damian Williams, who works as a prosecutor for the Southern District of New York, issued a statement about Zhong’s arrest and plea agreement that read:
“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.”
The affidavit in the case revealed that Zhong detected back in 2012 that he was able to withdraw more cryptocurrency out of Silk Road accounts that he created than he deposited.
When he figured out the vulnerability of the site, Zhong created multiple accounts, depositing money into the Bitcoin wallets for each, and then made multiple withdrawals of money for the whole sums so he could gain all the money.
