Jimmy Zhong is a notorious hacker who stole over 50,000 bitcoins (worth about $3 billion as of 2023) from the Silk Road, an online black market that operated on the dark web from 2011 to 2013. Zhong exploited a flaw in the Silk Road’s system that allowed him to withdraw more bitcoins than he had deposited. He then transferred the stolen coins to various wallets and hid them for years, hoping to evade detection and prosecution.
A fatal mistake
However, in 2021, Zhong made a fatal mistake that led to his downfall. He moved about $800 worth of bitcoins from one of his wallets to an exchange, where he registered with his real name and address. This transaction was spotted by Chainalysis, a blockchain analysis firm that had been tracking the Silk Road hacker’s coins since 2015. Chainalysis alerted the IRS Criminal Investigation Division (IRS-CI), which launched an operation to arrest Zhong.
51,000 bitcoins stolen from the Silk Road
In November 2021, IRS-CI agents raided Zhong’s home in Athens, Georgia, where they found a stash of cash, gold, silver, and other valuables. They also used trained sniffer dogs to detect electronic devices that might contain cryptocurrency wallets.
The dogs led them to a safe hidden under the floorboards of a bathroom closet. Inside the safe, they found a popcorn can that contained a single-board computer with a USB drive attached to it. The USB drive turned out to be one of Zhong’s wallets that held over 51,000 bitcoins stolen from the Silk Road.
Zhong was arrested and charged with wire fraud and money laundering. He pleaded guilty in October 2022 and agreed to forfeit his bitcoins and other assets to the US government. He is currently serving his prison sentence.
Silk Road continues to be a source of investigation
The case of Jimmy Zhong is one of the most remarkable examples of how cryptocurrency tracing and traditional police work can combine to catch cybercriminals who think they are anonymous and untouchable. It also shows how the Silk Road, which was shut down by the FBI in 2013, continues to be a source of investigation and prosecution for law enforcement agencies around the world.
“Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds,” said US Attorney Damian Williams in a statement. “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.”