U.S Court Sentences Silk Road Bitcoin Hacker a Year in Prison

• Zhong was able to deceive the DNM’s withdrawal mechanism into sending 50,000 BTC.
• Fake accounts were established by Zhong specifically for the purpose of the hack.

According to the New York Department of Justice, U.S. District Judge Paul G. Gardephe sentenced James Zhong to a year in prison after learning about the government’s plans to sell 41,000 seized bitcoin (BTC) this calendar year and the sale of 9,861.1707894 BTC on March 14, 2023.

By setting up nine different Silk Road accounts and initiating 140 separate transactions, Zhong was able to deceive the DNM’s withdrawal mechanism into sending 50,000 BTC to addresses under his control.

No Legitimate Purchases on Silk Road

Fake accounts were established by Zhong specifically for the purpose of carrying out the hack; he never made any legitimate purchases on Silk Road. Researchers have calculated that a net of over 50,000 BTC was obtained at a cost of between 200 and 2000 BTC.

Earlier, in August 2017, when Bitcoin was split, Zhong earned 50,000 Bitcoin cash (BCH), which he promptly traded in on an international cryptocurrency market for 3,500 BTC. Zhong’s home in Gainesville, Georgia had a hidden safe in the basement that was uncovered after some blankets and a Cheetos popcorn container were removed.

On three consecutive instances, federal officials took over 51,351.89785803 bitcoin, along with a stockpile of precious metals and $661,900 in cash. Officials also acquired 80% of RE&D Investments, a Memphis company with major real estate assets, from Zhong.

The New York Department of Justice, the Internal Revenue Service (IRS), the Los Angeles Field Office of the IRS Criminal Investigation Division’s Western Cyber Crimes Unit, and the Athens-Clarke County Police Department were all engaged in the case of 32-year-old Zhong, who pled guilty to wire fraud.