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James Zhong, Silk Road Hacker, Gets One Year in Prison for Wire Fraud

James Zhong, Silk Road Hacker, Gets One Year in Prison for Wire Fraud WikiBit 2023-04-20 18:14

James Zhong, responsible for the security breach of the Silk Road marketplace, has been sentenced to a year in prison for wire fraud offenses. He illicitly acquired over 50,000 units of bitcoin from the darknet marketplace in 2012, using bitcoin mixing services and a cryptocurrency exchange to impede tracing efforts. The US government also intends to sell 41,000 seized bitcoins this year.

As per the official statement released by the Department of Justice (DOJ) for the Southern District of New York, James Zhong, the individual accountable for the security breach of the Silk Road marketplace, has been convicted of wire fraud offenses and has been sentenced to a term of imprisonment of one year. In September of 2012, Zhong illicitly acquired in excess of 50,000 units of the digital currency known as bitcoin from the darknet marketplace (DNM). As per the statement of Damian Williams, an attorney at the Department of Justice, Zhong employed a bitcoin mixing service, a global cryptocurrency exchange, and a sophisticated set of technological instruments to impede tracing endeavors.

As per a legal record, the United States government intends to vend 41,000 seized bitcoins (BTC) in the current year. As per the records of the New York Department of Justice, James Zhong was sentenced to a year in jail by U.S. District Judge Paul G. Gardephe on March 14, 2023, following the sale of 9,861.1707894 BTC.

Zhong stole from the Silk Road DNM by establishing nine Silk Road accounts and generating 140 transactions that deceived the DNM's withdrawal mechanism into releasing 50,000 BTC to addresses under his control. Interestingly, Zhong never accessed Silk Road for its primary purpose, and the fraudulent accounts were only used to carry out the attack. Investigators believe that it required between 200 and 2,000 BTC to achieve a net total of more than 50,000 BTC.

Years later, when Bitcoin was split in August 2017, Zhong received 50,000 Bitcoin cash (BCH). Following the split, he sold all of his BCH to an international Bitcoin exchange for $3,500 BTC. The cash was found in an underground floor safe immersed in blankets and a Cheetos popcorn pan inside Zhong's home in Gainesville, Georgia.

On three consecutive instances, federal officials confiscated roughly 51,351.89785803 bitcoin, as well as a stockpile of precious metals and $661,900 in cash.

In addition, authorities acquired Zhong's 80% stake in RE&D Investments, a Memphis corporation with significant real estate assets.

Zhong, 32, entered a guilty plea to wire fraud. The case also involves the Internal Revenue Service (IRS), the Criminal Investigation's Western Cyber Crimes Unit of the Los Angeles Field Office, and the Athens-Clarke County Police Department, in addition to the DOJ of New York.

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