IRS Arrests $3.36 Billion worth of Bitcoin from Silk Road Hackers

According to an IRS-CI affidavit detailing Zhong’s theft of more than 50,000 bitcoins from the Silk Road, he appears to have found a loophole in the dark web market that in 2012 allowed him by someone withdraws more money from the account he created there. compared to the amount he has deposited. The affidavit describes how he successively registered accounts on the site with names like “thetormentor” and “dubba”, deposited some amount into a Bitcoin wallet for each account, and then made repeated withdrawals the whole amount is kept there for a single second to multiply your coins many times. This appears to have exploited a bug in the Silk Road that allows for quick withdrawals without prior confirmation that the requested amount still exists in the user’s account. “This way, [Zhong]using each fraudulent account, moved at least 50,000 Bitcoins out of Silk Road in just a few days,” reads the affidavit signed by IRS-CI special agent Trevor McAleenan.

Over the next nine years, Zhong appears to have left that large sum of money almost completely unspent — perhaps out of fear that converting it into traditional currency would attract the attention of law enforcement. But even that monumental restraint appeared to be in vain, as IRS-CI investigators still traced Zhong’s coins in his account on an unnamed crypto exchange, where revealed his identity. Zhong’s case reflects very closely The story of the previous Silk Road hacker. But, perhaps due to the ambiguity of the massive crypto fortunes talks, no charges against Individual X have been disclosed publicly. In contrast, Zhong now faces an electronic wire fraud sentence that carries a sentence of up to 20 years in prison.

The Silk Road was disrupted by a major law enforcement operation in late 2013, leading to the arrest of Ross Ulbricht, the website’s creator, who was sentenced to life in prison and ordered to pay $183 million in damages. dollars. However, in another strange twist, a portion of the 70,000 bitcoins seized from the Silk Road of Person X was applies to the debt of Ulbrichtpaid off that amount in exchange for him agreeing not to claim the remaining amount.

Using bitcoins stolen from the Silk Road to compensate the site’s creators seems like an odd twist. But in an age where IRS-CI crypto seizures regularly pour billions of dollars into the US Treasury Department, it still seems like a lot to work out.


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