Websites that rely on cryptocurrency for in-site purchases can be pretty vulnerable to criminal activity. There’s a lot of hacking going on. Because crypto is decentralized and relies entirely on its own platform, hackers have lots of opportunities to exploit the system. About US$1.9 billion worth of cryptocurrency had been stolen in hacks through July 2022, and just under US$1.2 billion had been stolen at the same point in 2021.
On Monday, the US Department of Justice announced it seized about US$3.36 billion in stolen bitcoin back in 2021 during a previously unannounced raid of James Zhong’s home in Gainesville, Georgia. That’s about 50,676 bitcoin. This is the DOJ’s second-largest financial seizure to date. Last Friday, Zhong pleaded guilty to wire fraud, which carries a max sentence of 20 years in prison. He stole the bitcoin by hacking the illegal Silk Road marketplace, a forum on the dark web for crypto transactions of drugs and other shady products and services. Silk Road was shut down by the FBI in 2013, and its founder is serving a life prison sentence.
“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 bitcoin from Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. 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,” US Attorney Damian Williams said in a press release.
IRS agent Tyler Hatcher said that after Zhong went through with the heist, “he attempted to hide his spoils through a series of complex transactions which he hoped would be enhanced as he hid behind the mystery of the ‘darknet.’”