US Government Now Has More BTC Than Largest Crypto Holders

Roughly $1 billion worth of bitcoin was recovered in what the Department of Justice calls the second-largest financial seizure ever

article-image

Department of Justice | Source: Shutterstock

share

The US Department of Justice has seized roughly $1 billion worth of bitcoin (BTC) from a man who “unlawfully obtained” more than 50,000 bitcoins from the Silk Road dark web internet marketplace in 2012.

James Zhong pleaded guilty in court on Nov. 4 to committing wire fraud and is set to be sentenced in February.

The whereabouts of the stolen 50,000 BTC remained unknown for more than 10 years, according to Damian Williams, US attorney for the southern district of New York.

Zhong had executed a detailed scheme designed to steal bitcoin from the Silk Road Marketplace — one of the first modern darknet markets. Silk Road operated as a Tor hidden service — a privacy tool that allows anonymous internet browsing. 

Tyler Hatcher, a criminal investigator for the Internal Revenue Service (IRS) said following the heist, Zhong “attempted to hide his spoils through a series of complex transactions.” 

But that didn’t prevent law enforcement from following the bitcoin trail. After obtaining a search warrant for Zhong’s residence in November 2021, authorities located the lost bitcoins in “an underground floor safe,” as well as on a single-board computer in a bathroom closet. The computer was beneath blankets in a popcorn tin stored in a bathroom closet. 

The bitcoins were worth roughly $3.4 billion at the time of the seizure. Officials also found nearly $662,000 in cash.

“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,” Williams said in a statement.

In February, a New York couple was indicted for stealing about 120,000 BTC, much of which was recovered by law enforcement.

Another Silk Road-related seizure in November 2020 netted the government 70,000 BTC.

The latest haul puts the US government significantly ahead of the largest corporate holders of BTC — more than Microstrategy, Block.one or the soon-to-be-released surviving bitcoins from the bankrupt Mt. Gox crypto exchange. 

Forfeited assets are likely to be administered by the Treasury Executive Office for Asset Forfeiture, which manages the Treasury Forfeiture Fund (TFF) — an account for where non-tax forfeitures are deposited.

Previously, seized assets have been auctioned off to various bidders. Most notably, in 2014, venture capitalist Tim Draper purchased 30,000 bitcoins for an undisclosed amount.

This story was updated on Nov. 7 at 3:18 p.m. ET, to clarify the current US dollar value of the bitcoin seized.


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million

article-image

Plus, funds go to a platform making development on Solana easier