Feds announce $3.36 billion seizure of bitcoin, the second-largest recovery of crypto so far

The Department of Justice announced Monday that it seized astir $3.36 cardinal successful stolen bitcoin during a previously-unannounced 2021 raid connected the residence of James Zhong.

Zhong pleaded blameworthy connected Friday to 1 number of ligament fraud, which carries a maximum condemnation of 20 years successful prison.

U.S. authorities seized astir 50,676 bitcoin from Zhong during a hunt of his location successful Gainesville, Georgia connected Nov. 9, 2021, the Department of Justice said, announcing details of the Department's 2nd largest fiscal seizure to date. It follows the $3.6 cardinal successful allegedly stolen cryptocurrency linked to the 2016 hack of the cryptocurrency exchange, Bitfinex.

According to authorities, Zhong stole bitcoin from the amerciable Silk Road marketplace, a acheronian web forum connected which drugs and different illicit products were bought and sold with cryptocurrency. Silk Road was launched successful 2011, but the Federal Bureau of Investigation unopen it down successful 2013. Its founder, Ross William Ulbricht, is present serving a beingness condemnation successful prison.

"For astir 10 years, the whereabouts of this monolithic chunk of missing Bitcoin had ballooned into an implicit $3.3 cardinal mystery," said U.S. Attorney Damian Williams.

According to the Southern District of New York, Zhong took vantage of the marketplaces' vulnerabilities to execute the hack.

IRS-CI Special Agent successful Charge Tyler Hatcher said Zhong used a "sophisticated scheme" to bargain the bitcoin from the Silk Road marketplace. According to the property release, successful September 2012, Zhong created 9 fraudulent accounts connected Silk Road, backing each with betwixt 200 and 2,000 bitcoin. He past triggered implicit 140 transactions successful accelerated succession, which tricked the marketplace's withdrawal-processing strategy to merchandise astir 50,000 bitcoin into his accounts. Zhong past transferred the bitcoin into a assortment of wallet addresses each nether his control.

Public records amusement Zhong was the president and CEO of a self-created company, JZ Capital LLC, which helium registered successful Georgia successful 2014. According to his LinkedIn profile, his enactment determination focused connected "investments and task capital."

His illustration besides states helium was a "large aboriginal bitcoin capitalist with extended cognition of its interior workings," and that helium had bundle improvement acquisition successful machine programming languages.

Zhong's societal media profiles see pictures of him connected yachts, successful beforehand of airplanes, and astatine high-profile shot games.

But these types of hacks didn't extremity with the Silk Road's demise. Crypto platforms proceed to beryllium susceptible to criminals.

In October 2022, Binance, the world's largest crypto speech by trading volume, suffered a $570 cardinal hack. The institution said a bug successful a astute declaration enabled hackers to exploit a cross-chain bridge, BSC Token Hub. As a result, the hackers withdrew the platform's autochthonal cryptocurrency, called BNB tokens.

In March 2022, a antithetic hacker recovered vulnerabilities successful the decentralized concern platform, Ronin Network, and made disconnected with much than $600 cardinal – the largest hack to date. The backstage keys, which service arsenic a password to support the cryptocurrency funds successful a wallet, were compromised.

According to a Chainalysis report, $1.9 cardinal worthy of cryptocurrency had been stolen successful hacks of services done July 2022, compared to conscionable nether $1.2 cardinal astatine the aforesaid constituent successful 2021.