The Department of Justice reported on Nov. 7 that it found and seized stolen Bitcoin in 2021 — worth about $3.36 billion at the time — from a computer hidden under blankets in a popcorn tin in the bathroom closet of a man in Gainesville, Georgia.
The previously-unannounced stash of 50,000-plus Bitcoins, now worth a greatly reduced $1.04 billion, was found during a raid on the residence of James Zhong. It is the second-largest cryptocurrency seizure, outranked by the 70,000 Bitcoins seized in February 2016 in the Bitfinex crypto exchange hack.
Zhong stole Bitcoin in 2012 from the illegal Silk Road marketplace, a dark web forum where drugs and other black market products were bought and sold with cryptocurrency, according to authorities. The whereabouts of the stolen Bitcoin remained a mystery for years.
Silk Road was launched in 2011, but the FBI shut it down in 2013. Founder Ross William Ulbricht is serving a life sentence in prison.
In September 2012, Zhong took advantage of the vulnerabilities on the marketplace and defrauded Silk Road by creating nine accounts that concealed his identity, triggering more than 140 transactions in quick succession. He tricked Silk Road’s withdrawal-processing system into releasing 50,000 Bitcoin from its Bitcoin-based payment system into his accounts, transferring this Bitcoin to separate addresses also under his control, according to the DOJ.
Law enforcement found Zhong’s Bitcoin stash in an underground floor safe and on a single-board computer hidden under blankets in a popcorn tin stored in a bathroom closet.
Black Americans Have the Highest Mortality Rates But Lowest Levels of Life Insurance
Are you prioritizing your cable entertainment bill over protecting and investing in your family?
Smart Policies are as low as $30 a month, No Medical Exam Required
Click Here to Get Smart on Protecting Your Family and Loves Ones, No Matter What Happens
“For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” U.S. Attorney Damian Williams said in a prepared statement. “This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”
Zhong was the president and CEO of his company, JZ Capital LLC, which he registered in Georgia in 2014, according to public records, CNBC reported. The company focused on “investments and venture capital,” according to his LinkedIn profile.
He was also a “large early Bitcoin investor with extensive knowledge of its inner workings,” and had software development experience in computer programming languages, according to his profile.
The feds also found $661,900 in cash as well as precious metals in Zhong’s home. Zhong’s social media profiles include photos of him on yachts, in front of airplanes, and at high-profile football games, CNBC reported.
He pleaded guilty to committing wire fraud in 2012, according to the DOJ.
As of July 2022, $1.9 billion worth of crypto had been stolen in hacks compared to less than $1.2 billion a year earlier, according to a Chainalysis report.