Good day everyone,
I hope you are all well and are having an excellent week, welcome to CryptoGod-1’s blog on all things crypto. Today I will be looking at the recent news regarding a Georgia man who stole more than 50,000 Bitcoin from the Silk Road marketplace in 2012 and has been sentenced to a year in prison for his crime.
James Zhong
The man question in this crime is James Zhong, a a Georgia man who is known to have stolen around 51,680 Bitcoin from the famed dark web marketplace. The Silk Road Market was closed in 2013 by the FBI, but a year before that Zhong committed his crime.
At the time Bitcoin was trading for in and around $11, meaning his crime added up to about $600,000 in 2012. Pennies in comparison to what it would be worth in today's market, but it still did not stop him committing his scheme back then to acquire the Bitcoin. However, it was far from a sophisticated hack or any technique of the sort which saw him land such a large score. Instead, Zhong made use of a glitch discovered on the Silk Road's website.
Amazingly, the glitch worked when he tried to withdraw the Bitcoin he had stored on the website. In December 2012 when he went to withdraw the funds, he accidentally double-clicked on the withdraw button, and this resulted in the withdrawal happening twice. Believing he may have hit the jackpot, Zhong decided to deposit more Bitcoin on the website and proceeded to double click the withdrawal button once again. A simple technique which he discovered by accident, Zhong continued the process until he had over 50,000 Bitcoin withdrawn. He was a 22 year old Computer Science student at the University of Georgia at the time.
Sentencing
On Friday the 14th of April 2023 the U.S. Justice Department announced that Zhong had been sentenced to one year and one day in prison for the charges related to his theft of the Bitcoin. The DOJ also added that Zhong had been charged with one count of wire fraud due to unlawfully obtaining over 50,000 Bitcoin from the dark web Silk Road drug-trafficking marketplace.
It was in 2021 when the US police performed a raid on Zhong's home in Gainesvilla in Georgia, USA. During the raid they discovered 50,676 Bitcoin on his devices, which at the time was worth around $3.36 billion. At the time the seizure went unannounced, meaning when it was made public in November of 2022, at a time when the price of Bitcoin was around the $60,000 mark, it was the second-largest financial seizure in the United States history. The value of the Bitcoin seized is now about $1.56 billion.
Zhong pleaded guilty to his charge of one count of wire fraud, which can have a maximum sentence of 20 years behind bars.
It was also noted that Zhong had spent in and around $16 million of the stolen BTC on real estate investments, luxury hotels, nightclubs, and Lamborghinis. The true "Wen Lambo" story if ever there was one.
According to U.S. Attorney Damian Williams:
“Cyber-criminals should heed this message: we will follow the money and hold you accountable, no matter how sophisticated your scheme and no matter how long it takes,”
However, it should also be noted that Zhong was treated somewhat lenient compared to what some could face for similar charges. This is because the prosecutors asked the judge, Paul Gardephe, to ensure that Zhong faced less than two years behind bars, citing his youth, his autism, and his help in recovering the stolen crypto. They did note that he should get prison as Zhong had covered up his theft for nearly a decade, and in the process he had moved the Bitcoin through many mixers which made it more difficult to trace transactions.
His lawyers also put forth the argument that Zhong was “severely bullied and victimized by his peers because he was different — he was extremely shy, overweight, and most significantly, suffered from undiagnosed autism spectrum disorder.”
Who Owns the Bitcoin?
The lawyers for Zhong also put forth the case that while Zhong was not the rightful owner of the Bitcoin, neither was the Silk Road marketplace. They argued the Silk Road was not a victim of a crime in the true sense of the word as it was committing its own crime by merely existing and facilitating the sale of drugs, along with other illicit things, online.
They also noted how the founder of the Silk Road, Ross Ulbricht, had contacted Zhong to ask him how he had taken the Bitcoin off the marketplace. It was back in 2013 that the Silk Road was shut down by the FBI after an intensive case which took them years to located its creator, and the servers. Its creator, Ross Ulbricht, is currently serving two life sentences without the possibility of parole.
If you would like to read more about the Silk Road you can read all about it in a previous post of mine: Who is Ross Ulbricht?
Have a great day and enjoy your week ahead.
Peace. CryptoGod-1.
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