The incredible story of the Silk Road thief

51,680 bitcoins, equal to at least one billion {dollars} at present costs. On Friday, American justice introduced the arrest of James Zhong, a 32-year-old resident of the state of Georgia, who had been wished for greater than 10 years, following the restoration of this enormous loot of bitcoins from his residence. He pleaded responsible to wire fraud final Friday and can stand trial in February 2023. He faces as much as 20 years in jail.

In 2012, people stole funds from the Silk Road on-line market, at the time dubbed Drug eBay », which sells weapons or hacking software program, amongst different unlawful services Accessible solely via the Tor community – a component of the Internet also known as “”. Dark Web » -, Silk Road operated illegally, and was ultimately shut down by the FBI in 2013. Its founder, Ross Ulbricht, was sentenced to life in jail, and his bitcoins had been confiscated. But the story of the Bitcoin thief remained unsolved, at the same time as his loot solely elevated in worth.

Bitcoins hidden in popcorn containers

James Zhong stored the info to entry the stolen bitcoins on a single-board pc, that’s, a skinny plate of a number of centimeters with a printed circuit and connection ports on it. To discover him, investigators needed to open a closet in his lavatory, raise piles of blankets and eventually entry a cache buried in the flooring. Among different valuables (together with silver and gold bars) was a field of popcorn, containing wafers.

The seizure befell on November 9, 2021, when the worth of Bitcoin was close to its peak. The loot at the time was value greater than $3.36 billion, in comparison with simply over $1 billion at this time. The preliminary quantity made it the second largest loot seized by the US authorities. In earlier instances, the courtroom had put the seized bitcoins up for public sale as a result of they had been thought of objects, not cash.

Bug abuse

James Zhong’s arrest led to extra details about the technique used throughout the housebreaking, which turned out to be comparatively easy. The thug, who was 23 at the time, abused Silk Road’s money withdrawal system. At its peak, the platform housed greater than 150,000 patrons and 4,000 sellers. In all, American Justice estimates 9.5 million bitcoins from all transactions executed on the platform.

Since unlawful markets don’t use direct fee techniques, they’re pressured to undergo a kitty system. Buyers credit score bitcoins to their accounts, that’s, they ship to an deal with managed by the platform homeowners, who will switch them to sellers when the transaction is accomplished, apparently taking a fee from the passage. In different phrases, all the cash circulating on the platform is in a handful of owner-controlled wallets. And James Zhong discovered tips on how to abuse this technique.

As a primary step, he created 9 pretend accounts, then deposited between 200 and a couple of,000 bitcoins in every. In 2012, the worth of Bitcoin fluctuated between $10 and $12, as recalled. edge, so his base guess was nonetheless a number of thousand {dollars}. Step Two: For every of his accounts, he despatched huge withdrawal requests to the platform, as much as 5 per second, to dam Silk Road’s fee system. The latter, very slowly, requested every withdrawal and thus despatched Zhong way more bitcoins than he had in his account.

In complete, the thief repeated his process 140 occasions, and thus emptied the total Silk Road deposit, the solely safety of which was to carry not more than 50,000 bitcoins at a time. At the conclusion of his misdeed, the thief needed to unfold the withdrawn quantities into totally different Bitcoin wallets simply to cowl his tracks and conceal his identification as a lot as attainable. In truth, transactions on the Bitcoin blockchain are public, and traceable. But you continue to must know the place to look and who owns the many digital wallets the place the cash goes. After this manipulation, James Zhong lastly consolidated his loot at two addresses.

The Silk Road cleaning soap opera is over

The episode marked the finish of the cleaning soap opera Silk Road, 9 years after founder Ross Ulbricht was arrested in the science fiction part of a San Francisco bookstore. Authorities then seized his pc, and found the digital key to unlock half of the Silk Road Bitcoin pockets. The FBI recovered about 144,000 bitcoins, equal to $105 million at the time, after which bought them at public sale. This sum, nevertheless, is barely a fraction of the platform’s estimated loot. The thriller started with the treasures of the Silk Road.

In 2020, investigators solved the first piece of the puzzle and seized a pockets containing 69,370 bitcoins. Although these hundreds of bitcoins had been value only a few million {dollars} in the early 2010s, their worth has risen together with the cryptocurrency till it crossed the billion greenback mark in 2020. Becomes one of the largest monetary investigations in historical past. And solely the theft case remained to be solved, which occurred after 9 years.

Almost sarcastically, James Zhong himself would give the police a helpful clue to search out him. In 2019, he filed a grievance for a theft, wherein he acknowledged “ Lots of Bitcoins » Among the stolen items. From this second the authorities had been shocked about the quantity pushed by the individual, till lastly discovering proof of his guilt.