US authorities seize $3.36 billion in bitcoin from decade-old Silk Road hack

Quick Take

  • The Department of Justice seized over 50,000 bitcoin from a hacker who just pleaded guilty to illegally obtaining them from Silk Road 10 years ago. 
  • It is the Justice Department’s second-largest asset seizure in history. 

The Department of Justice seized over $3.36 billion worth of bitcoin from a hacker who stole 50,000 bitcoin from Silk Road a decade ago. 

Officials said the action was, at the time, the DOJ's biggest cryptocurrency seizure ever and remains the second-largest of any kind in its history.  

James Zhong pleaded guilty before a Manhattan court to wire fraud over his hack of 50,676 BTC from the Silk Road back in 2012. The Silk Road was the first major darknet marketplace, allowing merchants to sell often-illegal wares in exchange for bitcoin.  Zhong managed to trick Silk Road's payments processor into giving him the bitcoin via a range of fake accounts.

"For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery," the Justice Department's announcement said. 

Authorities initially seized the bitcoin, as well as bars of precious metals and over $600,000 in cash, from Zhong's home during a raid on Nov. 9 of last year. They found the bulk of the bitcoin in private keys in an underground safe and "on a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet."

Almost a year later, the Justice Department is publicizing that seizure. It was at the time the largest of its kind, eclipsed in February of this year during the arrest of Heather "Razzlekhan" Morgan and Ilya Lichtenstein, who had tried to launder money from a 2016 hack of Bitfinex. 

As a result of the market collapse over the past year, Zhong's bitcoin today is worth just over $1 billion. 

(Updates with details on the initial seizure last year.)

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