US Government to Sell Remaining 41,490 Bitcoins Seized from Silk Road Thief, After Selling 9,800 BTC
In a stunning development, court documents reveal that James Zhong, a resident of the United States, used fraudulent accounts in 2012 to steal more than 50,000 bitcoins from Silk Road, the notorious darknet marketplace that was shut down by the FBI in 2013.
After a lengthy investigation, law enforcement officers searched Zhong’s home in 2021 and seized most of the bitcoins. The U.S. government sold 9,800 bitcoins on March 14, 2023, for around $237 million, and plans to sell the remaining 41,490 bitcoins (around $1,18 billion) in four installments.
Zhong, who is scheduled to be sentenced on Friday, April 14, 2023, at 3:00 p.m., faces a stipulated guidelines range of 27 to 33 months in prison. The Probation Office has recommended a below-guidelines sentence of 24 months, and the government agrees that there are significant mitigating factors in Zhong’s case, including his youth, autism, and his assistance to law enforcement in accessing multiple billions of dollars of crime proceeds.
However, the government also argues that an incarceratory sentence is necessary in this case, given the seriousness of Zhong’s nearly decade-long conduct, the sophistication of his post-theft actions to conceal his identity and the source of the crime proceeds, and to avoid signaling to Zhong and others that such conduct presents little risk beyond simply being asked to pay back whatever remains of the crime proceeds.
Zhong spent approximately $16 million of the stolen funds in the 51 months before law enforcement’s search of his residences, spending lavishly on real estate investments, luxury products, travel, hotels, nightclubs, and other expenses.
The government believes that Zhong’s conduct warrants imprisonment, but acknowledges the mitigating factors in his case. Therefore, it recommends a below-guidelines sentence that is sufficient but not greater than necessary to meet the goals of sentencing in this case. The court will make the final decision on Zhong’s sentence on April 14, 2023.
Justin Sun Offers To Buy 41,490 Bitcoin From US Government
Silk Road, a notorious “darknet” black market, was founded and operated by Ross William Ulbricht from approximately 2011 to 2013. It served as a platform for drug dealers and other illegal vendors to distribute an array of illicit goods and services, including but not limited to, illegal computer hacking services, forged identity documents, murder-for-hire or “hitman” services, and money laundering. The Silk Road operated using Bitcoin as the only form of payment, and all transactions were conducted through a Bitcoin “bank” internal to the marketplace.
To conduct transactions on the Silk Road, every user had to hold a Silk Road account, which was associated with at least one Silk Road Bitcoin address. These addresses were stored on wallets maintained on servers controlled by the Silk Road. In order to make purchases, users had to obtain Bitcoin and send it to the Bitcoin address associated with their Silk Road account. This unique payment system allowed the Silk Road to operate with relative anonymity, enabling its users to carry out illegal activities without being detected by law enforcement.
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