The second-largest Bitcoin seizure ever just happened

3.6B dollars worth of bitcoin seized

The US Justice Department has just announced a historical $3.36 billion seizure linked to Silk Road. This seizure is the second largest one in the history of the Department. The Department of Justice managed to get the amount of $3.36 billion worth of Bitcoin which was linked with Silk Road, the dark-net marketplace.

This reveal has just hit the spotlight after James Zhong, the man who received 50,676 Bitcoin in September 2012 pled guilty to one count of wire fraud on Friday. This seizure was one of the biggest in the history of the US Department of Justice and even today remains the second-largest financial seizure ever. This seizure is just behind the $3.6 billion seizure that happened earlier this year from a married couple who was charged with money laundering.

How did Zhong manage to get the money?

In September 2012 Zhong committed fraud by creating nine Silk Road accounts in a manner to conceal his identity. He did more than 140 transactions for Silk Road to release him approximately 50,000 Bitcoins. Silk Road transferred all of this bitcoin into a variety of separate addresses, all of them were under Zhong’s control. He designed the system to prevent detection, conceal his identity and ownership and also obfuscate the Bitcoin’s source.

His fortune got bigger in time because Bitcoin’s hard fork made a matching amount of 50.000 Bitcoin Cash units. After he laundered those funds too, Zhong was sitting on 53,500 Bitcoin in crime proceeds. On the 9th of November, police went to Gainesville, Georgia in order to raid the place where the bitcoin were located. This was the place where all of Zhong’s electric equipment was stored. He kept all of his bitcoins in an underground floor safe and on a single-board computer that was submerged in a bathroom closet.

Police also managed to recover $661.900 in cash and 25 Casascius coins with a value of 174 Bitcoin, 11 additional Bitcoin and also some precious metal bars.

The method that Zhong used was wire fraud. For almost ten years, bitcoin’s price rose a lot in time, and nowadays the total value of the seizure is $3.3 billion. Police used state-of-the-art cryptocurrency tracing to locate and recover this impressive amount of bitcoin while Zhong pled guilty at 32 years old with wire fraud. He has now to serve a maximum sentence of 20 years in prison, and at current prices, the fed’s get about 1/3rd of the money split which is around 1 billion.