Cryptocurrency Fraud , Cybercrime , Fraud Management & Cybercrime
A Actual Property Developer Stole 50,000 Bitcoins from the Darkish Net Emporium a Decade In the past
A Georgia property developer who, a decade in the past, stole about 50,000 Bitcoin from cybercrime darkish site Silk Street pled responsible Friday to wire fraud, main federal prosecutors Monday to request the cryptocurrency’s formal seizure from convicted Silk Street proprietor Ross Ulbricht, aka the “Dread Pirate Roberts.”
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Court docket filings show James “Jimmy” Zhong, 32, in 2012 exploited a flaw within the Silk Street cryptocurrency pockets triggered by speedy, millisecond withdrawals. He stole about $577,000 price of cryptocurrency, based mostly on a table of historic Bitcoin worth. After splitting up the stolen funds in a bid to obfuscate their origin, Zhong saved the Bitcoin on units saved in an underground flooring secure and a “single-board pc” saved inside a popcorn tin in a toilet closet beneath a pile of blankets.
At the very least that is the place an IRS prison agent discovered them throughout a Nov. 9 2021 raid on Zhong’s Ganisville, Ga., home that additionally turned up greater than half one million {dollars} in money, apparently valuable metals and 25 bodily Bitcoin tokens referred to as Casascius cash price roughly 174 Bitcoin. On the time of the federal raid, the recovered stolen cryptocurrency was price $3.36 billion, which the Division of Justice says was then the biggest federal seizure of cryptocurrency and stays the second largest monetary seizure, ever. The recovered cryptocurrency is now price roughly $1 billion.
Zhong took a plea deal requiring him to forfeit the stolen bitcoin, the money and the contents of his secure, in addition to his 80 p.c stake in RE&D growth, a Memphis, Tenn., actual property concern that is been combating a collectors’ lawsuit in federal chapter courtroom since September. Zhong faces as much as 20 years in jail after pleading responsible plea to 1 depend of wire fraud.
The FBI arrested Ulbricht in 2013 in a San Francisco public library whereas he was logged onto the Silk Street unlawful market emporium from his laptop computer because the system administrator, utilizing his assumed title of Dread Pirate Roberts. Since founding the web site in 2011, Ulbricht paid roughly $650,000 in murder-for-hire schemes, though not one of the 5 supposed victims really died in consequence.
After his arrest, Ulbricht turned down a plea sentence supply of a minimal 10 12 months sentence. Following a jury path leading to a seven felony conviction, Ulbricht is now serving a double life sentence with out the potential for parole in a high-security jail in Tucson, Ariz. A federal choose in June turned down Ulbricht’s try and vacate the sentence on constitutional grounds.
Federal prosecutors a standing forfeiture order towards Ulbricht means the cryptocurrency recovered from Zhong is now federal property.
Zhong was in a position to steal the Bitcoin after discovering that he may set off Silk Street’s cost processing system into paying out extra quantities by creating an account after which making withdrawals throughout the similar second. That means a deposit of 500 Bitcoin may end in a 2500 Bitcoin haul.
Over the course of some days, he created about 9 consumer accounts and made 140 transactions.
U.S. Lawyer Damian Williams for the Southern District of New York attributed Zhong’s seize to “state-of-the-art cryptocurrency tracing and good old school police work.”
A federal choose launch Zhong Friday on bail of $310,000.
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