Crypto Thief Sentenced: IRS Seizes $3B in Bitcoin
James Zhong, a 32-year-old man, has been sentenced for his role in a major cryptocurrency theft. In 2012, Zhong exploited a flaw in Silk Road's Bitcoin withdrawal mechanism, stealing 50,000 Bitcoin. The IRS Criminal Investigations (IRS-CI) recently seized these funds, valued at over $3 billion at the time.
Zhong consolidated his ill-gotten gains into two wallets, with 40,000 Bitcoin in one and 10,000 in the other. In November 2021, IRS-CI agents discovered 50,491 Bitcoin, $660,000 in cash, precious metals, and 25 Casascius coins at Zhong's home. The seizure demonstrates law enforcement's capability to trace and recover cryptocurrency linked to criminal activities.
Zhong attempted to launder the funds through a mixing service and by exchanging Bitcoin Cash for more Bitcoin. However, investigators were able to trace the funds back to him through transactions at a centralized cryptocurrency exchange.
Zhong was sentenced to just over a year in prison in April 2023 for his role in the theft. He pled guilty to wire fraud. The seizure of his Bitcoin, one of the largest in history, serves as a stark reminder that cryptocurrency is not a safe haven for criminal activities.
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