Feds seize $3.36 billion in bitcoin, the second-largest restoration to this point

The U.S. Division of Justice introduced Monday that it seized about $3.36 billion in stolen bitcoin throughout a beforehand unannounced 2021 raid on the residence of James Zhong.

Zhong pleaded responsible Friday to at least one depend of wire fraud, which carries a most sentence of 20 years in jail.

U.S. authorities seized about 50,676 bitcoin, then valued at over $3.36 billion, from Zhong throughout a search of his home in Gainesville, Georgia, on Nov. 9, 2021, the DOJ stated. It’s the DOJ’s second-largest monetary seizure thus far, following its seizure of $3.6 billion in allegedly stolen cryptocurrency linked to the 2016 hack of the crypto change Bitfinex, which the DOJ introduced in February.

In response to authorities, Zhong stole bitcoin from the unlawful Silk Highway market, a darkish internet discussion board on which medication and different illicit merchandise had been purchased and offered with cryptocurrency. Silk Highway was launched in 2011, however the Federal Bureau of Investigation shut it down in 2013. Its founder, Ross William Ulbricht, is now serving a life sentence in jail.

“For nearly ten years, the whereabouts of this large chunk of lacking Bitcoin had ballooned into an over $3.3 billion thriller,” U.S. Lawyer Damian Williams stated in a press launch.

In response to the Southern District of New York, Zhong took benefit of {the marketplace}’s vulnerabilities to execute the hack.

Particular Agent in Cost Tyler Hatcher, of the Inner Income Service – Prison Investigation, stated Zhong used a “refined scheme” to steal the bitcoin from Silk Highway. In response to the press launch, in September 2012, Zhong created 9 fraudulent accounts on Silk Highway, funding every with between 200 and a pair of,000 bitcoin. He then triggered over 140 transactions in fast succession, which tricked {the marketplace}’s withdrawal-processing system to launch roughly 50,000 bitcoin into his accounts. Zhong then transferred the bitcoin into a wide range of pockets addresses all underneath his management.

Via blockchain evaluation and good old school police work, legislation enforcement and blockchain analytic specialists was in a position to get well greater than 50,000 bitcoin from Zhong. They even uncovered crypto saved on a pc submerged underneath blankets in a popcorn tin in a toilet closet, in line with the press launch.

Public information present Zhong was the president and CEO of a self-created firm, JZ Capital LLC, which he registered in Georgia in 2014. In response to his LinkedIn profile, his work there targeted on “investments and enterprise capital.”

His profile additionally states he was a “massive early bitcoin investor with intensive data of its interior workings” and that he had software program improvement expertise in pc programming languages.

Zhong’s social media profiles embrace photos of him on yachts, in entrance of airplanes, and at high-profile soccer video games.

However a lot of these hacks did not finish with the Silk Highway’s demise. Crypto platforms proceed to be weak to criminals.

In October 2022, Binance, the world’s largest crypto change by buying and selling quantity, suffered a $570 million hack. The corporate stated a bug in a sensible contract enabled hackers to take advantage of a cross-chain bridge, BSC Token Hub. Because of this, the hackers withdrew the platform’s native cryptocurrency, referred to as BNB tokens.

In March 2022, a unique hacker discovered vulnerabilities within the decentralized finance platform Ronin Community and made off with greater than $600 million — the most important hack thus far. The personal keys, which function passwords to guard cryptocurrency funds in wallets, had been compromised.

In response to a Chainalysis report, $1.9 billion price of cryptocurrency had been stolen in hacks of providers via July 2022, in contrast with slightly below $1.2 billion on the similar level in 2021.