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Dark Web: discover the crazy story of the 50,000 bitcoins stolen from Silk Road in 2012

 

Dark Web: discover the crazy story of the 50,000 bitcoins stolen from Silk Road in 2012

Ten years ago, Silk Road was hacked. By exploiting a loophole, a hacker stole more than 50,000 bitcoins from the dark web black market, considered the eBay of drugs. After a long investigation, this impressive cryptocurrency treasure was finally found… at the bottom of a popcorn box.

The United States Department of Justice announces that it seized more than 50,676 bitcoins in November 2021. During this seizure, the loot was still worth more than $3 billion. At the end of last year, the price of Bitcoin was still moving above the $60,000 threshold. A year later, the value of the bitcoins seized has been reduced by three. Currently, the queen of cryptocurrencies is hovering around $20,000, a far cry from its all-time high from last year.

Regardless, this is the second largest cryptocurrency seizure by US authorities. In number one, we find the operation targeting the couple formed by Heather Morgan and her husband, Ilya Lichtenstein, last February. After a long investigation, and several twists and turns, the police managed to recover 95,000 bitcoins. These currencies had disappeared during the hack of the Bitfinex exchange platform in 2016.

Bitcoins stolen from the Silk Road in 2012:

As the American justice explains, the bitcoins seized last November were discovered during a search of James Zhong, a 32-year-old man who lives in the state of Georgia. Loot was stored on multiple devices. Law enforcement found a motherboard in a safe under a floor and in a popcorn box hidden in a bathroom closet. In the safe, the police also discovered $600,000 in cash and precious metals.

Apparently, James Zhong got his hands on these bitcoins in 2012. The 22-year-old managed to seize some of the cryptocurrencies belonging to Silk Road, the most famous black market on the dark web. The marketplace made it possible to buy anything and everything with Bitcoin, such as weapons or drugs. Silk Road closed in 2013 following the arrest of its founder, Ross Ulbricht. Convicted of seven counts two years later, he was sentenced to life in prison.

To collect the cryptocurrencies held by Silk Road, James Zhong devised a clever scheme. The young man opened nine fake profiles on the platform. These accounts were funded with a handful of bitcoins. Each profile had between 200 and 2,000 bitcoins.

“Mr. Zhong came up with a sophisticated plan to steal bitcoins from the infamous Silk Road marketplace. Once he pulled off his robbery, he attempted to hide his loot through a series of complex transactions,” said Tyler Hatcher, the officer in charge of the theft investigation.

Subsequently, James Zhong exploited a Silk Road security hole. By making up to 140 transactions in a very short time, he convinced the marketplace withdrawal system to pay him 50,000 bitcoins to different digital wallets. To cover his tracks, he quickly transferred the stolen tokens to other addresses. The operation took no more than a few minutes.

Pirate's errors:

During the theft, the price of Bitcoin did not exceed 13 dollars. By taking advantage of the rise in the crypto-asset market, the thief has therefore amassed a real fortune. To grow his assets, Zhong has also taken advantage of the emergence of Bitcoin Cash. During the blockchain split in 2017, the cybercriminal obtained 50,000 Bitcoin Cash. These tokens, automatically sent to BTC holders, were directly exchanged for traditional Bitcoin, which helped inflate the fortune of the Silk Road hacker.

Having become well off, the young pirate invested in real estate. At the same time, he stood out for his ostentatious lifestyle. On social networks, he regularly displayed himself on luxurious private yachts. Nevertheless, he refrained from withdrawing most of his winnings to avoid attracting the attention of financial authorities.

Despite the precautions taken by the hacker, the police managed to find the trace of the stolen bitcoins by consulting the blockchain, says the press release. The blockchain indeed keeps track of all the transactions carried out, which facilitates the task of the authorities.

“For nearly a decade, the whereabouts of this massive missing piece of Bitcoin has turned into a $3.3 billion+ mystery. Using state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement has located and recovered this impressive criminal treasure trove,” said Damian Williams, the prosecutor in charge of the case. 'affair.

According to our colleagues from Protos, the police mainly got their hands on the thief following a call made in 2019. That year, James Zhong contacted the police to report a burglary at his home. He mentioned that many assets were stolen, including "lots of bitcoins". This assertion has aroused the interest of investigators, reports Protos, citing clarifications provided by the Ministry of Justice.

The hacker also made the mistake of exchanging some of his stolen bitcoins through an exchange. This is how the police were able to link the identity of the thief to the cryptocurrencies that disappeared in 2012.

20 years in prison for hacking the eBay drug store:

Arrested by police last year, James Zhong pleaded guilty to wire fraud at a recent hearing. He faces up to 20 years in prison. Nevertheless, it is very likely that his lawyer will manage to spare him this maximum sentence.

Since his arrest, Zhong has indeed cooperated with investigators. He also paid an additional 860 bitcoins to the US government last March.

“Mr. Zhong returned virtually all the Bitcoin he acquired improperly. Ironically, given Bitcoin's rise in value over the past decade, the value of the bitcoin he returned exponentially exceeded the value of the bitcoin he stole,” says attorney Michael Bachner. of the pirate, claiming leniency from the courts.

According to his lawyer, the man who robbed Silk Road is also consumed by remorse. The verdict will be delivered in February 2023.

Source: Justice.gov

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