US Government finds the Yellow Silk Road

    $3.36 billion of cryptocurrency has been seized—find out what that means for you

    The Department of Justice recently announced the seizure of $1 Billion worth of Bitcoin stolen from a darknet called Silk Road in 2012 and the conviction of one man, James Zhong in New York. At the time of the theft, Bitcoin was worth more than $3 Billion, but has since declined in value.

    What was Silk Road and who is Ross Ulbricht?

    Silk Road was an online black market and the first modern darknet market, best known as a platform for selling illegal drugs. It was launched in February 2011 on the Tor network as part of the dark web. Silk Road was operated by Ross Ulbricht under the alias “Dread Pirate Roberts” until his arrest in October 2013. The website was taken down by the FBI on 2 October 2013.

    In May 2015, Ulbricht was sentenced to life imprisonment without the possibility of parole.

    The Arrest and Conviction of James Zhong

    James Zhong committed wire fraud when he stole approximately 50’000 Bitcoin from Silk Road in 2012. 

    Zhong manipulated Silk Road’s withdrawal system by triggering 140 transactions in rapid succession, fooling the system into crediting several external wallets with Bitcoin, according to the Justice Department.

    Law enforcement seized 50’000 Bitcoin at premises linked to Zhong in Gainesville, Georgia, after it went missing for almost a decade – solving one of the greatest fabled mysteries in the Crypto world and at the time it was the biggest Crypto seizure in history. 
    On Friday the 4th of November 2022, Zhong pleaded guilty on all counts in the Southern District of New York and a conviction for wire fraud alone carries a maximum sentence of 20 years in prison.

    Massive Win against Crypto Fraud

    The conviction of James Zhong is a massive win in the fight against Crypto fraud. “This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin” the department said in a media statement. 

    Interestingly, the FBI agents who took down Silk Road have recently launched a company called Naxo Labs and are now helping the US government trace complex cryptocurrency fraud and dark web investigations. 

    In an industry struggling to shed itself of a negative reputation, this conviction together with the launch of Naxo Labs might cause a spark that is so badly needed.

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