The Silk Road US$3.4 billion crypto heist all started with a glitch
It was a dark web market platform usually used to buy stuff you aren’t really supposed to have, like drugs and illegal weapons.
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Have you heard of Silk Road? It was a dark web market platform usually used to buy stuff you aren’t really supposed to have, like drugs and illegal weapons. And it used blockchain for these transactions to make them pretty much untraceable. Silk Road hasn’t been running since 2013, but during the span of about two years, over 9.5 million bitcoins were accounted for in sales. That would be over US$263 billion today.
Back in 2012, a man named James Zhong committed a crypto heist using the website, and he ended up stealing 50,000 bitcoin, equal to US$3.4 billion when he was found out in 2021. Authorities took the devices that the bitcoin was stored on, making this the second-biggest financial seizure in US history.
But 22-year-old Zhong didn’t have plans to steal this crypto in 2012. He was using Silk Road to buy cocaine and stumbled on a glitch in the system while trying to withdraw his own money.
“I accidentally double-clicked the withdraw button and was shocked to discover that it resulted in allowing me to withdraw double the amount of bitcoin I had deposited,” Zhong later said in federal court. After that first withdrawal surprise, Zhong simply started making new accounts and double-withdrawing them to steal 50,000 bitcoins, according to court papers. At the time, it was only worth US$620,000, but that’s a lot of money for just a few hours of clicking buttons.
With the value of all this crypto totally blowing up over the years, Zhong barely put a dent in it all when he blew US$16 million on real estate, luxury hotels, a lake house, luxury cars and more. For nine years, he was able to hide his wealth by moving the money around between his accounts. But, after authorities shut down Silk Road, they got their hands on the site’s transaction history and eventually figured everything out.
Just a couple of weeks ago, Zhong got his prison sentence after admitting to wire fraud last year. He has to serve a year plus one day in prison, when he was originally facing up to 28 months. This crime itself has unique circumstances because the operation being stolen from (Silk Road) was illegitimate.
The judge at the sentencing said, “While the victim in this case happened to be a criminal enterprise, the victim tomorrow could be a legitimate business.”
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