EletiofeIRS Seizes Another Silk Road Hacker’s $3.36 Billion Bitcoin...

IRS Seizes Another Silk Road Hacker’s $3.36 Billion Bitcoin Stash

-

- Advertisment -

According to an IRS-CI affidavit detailing Zhong’s theft of the 50,000-plus bitcoins from the Silk Road, he appears to have found a vulnerability in that dark-web market that in 2012 allowed him to somehow pull more coins out of accounts he created there than he had deposited. The affidavit describes how he registered a succession of accounts on the site with names like “thetormentor” and “dubba,” deposited a sum of coins into the Bitcoin wallets for each account, and then made repeated withdrawals of the entire sums held there within a single second to multiply his money several times over. This apparently exploited a bug in the Silk Road that allowed those rapid-fire withdrawals without first confirming that the requested money still existed in a user’s account. “In this fashion, [Zhong], using each of the fraud accounts, moved at least approximately 50,000 Bitcoin out of Silk Road in just a few days,” reads the affidavit, which was signed by IRS-CI special agent Trevor McAleenan.

Over the nine years that followed, Zhong appears to have left that massive windfall almost entirely unspent—perhaps for fear that cashing it out into traditional currency would attract the attention of law enforcement. But even that epic restraint appears to have been in vain, as IRS-CI investigators nonetheless traced Zhong’s coins to his accounts on an unnamed cryptocurrency exchange, which revealed his identity. Zhong’s case closely mirrors the story of the earlier Silk Road hacker, referred to in court documents only as Individual X, who similarly exploited a vulnerability in the Silk Road to take nearly 70,000 bitcoins from the site and hold them for more than seven years. But, perhaps due to the vagaries of negotiations over massive cryptocurrency fortunes, no charges against Individual X have been publicly revealed. Zhong, by contrast, now faces a wire fraud conviction that carries as much as 20 years in prison.

The Silk Road was torn down by a massive law enforcement operation in late 2013, leading to the arrest of Ross Ulbricht, the site’s creator, who was sentenced to life in prison and ordered to pay $183 million in restitution. In yet another bizarre twist, however, a portion of the seized 70,000 bitcoins taken from the Silk Road by Individual X were applied toward Ulbricht’s debt, paying it off in full in exchange for his agreement not to lay any claim to the remaining money.

Using bitcoins stolen from the Silk Road to pay off the restitution of that site’s creator may seem like a strange turn of events. But in an era when IRS-CI cryptocurrency seizures regularly pours billions of dollars into the US Treasury, there seems to be plenty to go around.

Latest news

A First Look at Samsung’s 2024 TV Lineup

Spring is in the air, and that means the fresh crop of 2024 TVs are getting ready to make...

AWOL LTV-3500 Pro Review: So Bright, So Expensive

Projectors can be a niche option for your living room, if only because they often require a lot of...

Is a Nintendo Switch Worth Buying Right Now? (2024)

With that in mind, there are a few nuggets that might be certain. The next console is likely to...

RFK Jr. Has Assembled His Anti-Vax Conspiracy Squad

Conspiracy theories and the people creating them have overwhelmed the US political process, and they’re becoming only more prevalent...
- Advertisement -

Kaduna School Children Reunite With Parents Three Days After Release

The rescued pupils of Lea Primary School and Government Secondary School Kuriga, Chikun Local Government Area of...

BREAKING: Military Bows To Pressure, Releases Abducted Editor

The Editor of FirstNews Online Newspaper, Segun Olatunji, has finally regained his freedom after spending as many as 14...

Must read

A First Look at Samsung’s 2024 TV Lineup

Spring is in the air, and that means the...

AWOL LTV-3500 Pro Review: So Bright, So Expensive

Projectors can be a niche option for your living...
- Advertisement -

You might also likeRELATED
Recommended to you