A brand new report delves deeper into the lifetime of Jimmy Zhong, shedding mild on his involvement within the theft of hundreds of Bitcoins from Silk Street.
In 2012, somebody stole 50,000 Bitcoins from Silk Street, an unlawful on-line market on the darknet. Since then, the worth of the stolen BTC has skyrocketed to over $3 billion. It has remained one of many largest mysteries within the cryptocurrency world.
Nevertheless, mild has lately been shed on this thriller. Journalists found beforehand unreleased footage that gives a glimpse into the investigating course of. CNBC printed the story of the life and arrest of Jimmy Zhong and launched a brand new documentary referred to as “Crypto 911: Exposing a Bitcoin Billionaire.”
Who’s Jimmy Zhong?
Jimmy Zhong got here to review in the US from China and masqueraded as a rich scholar residing close to the College of Georgia in Athens, attempting to not miss native events.
In 2012, James Zhong, “Jimmy,” is 22. He’s a scholar on the College of Georgia, the unloved baby of a divorced Chinese language immigrant couple, affected by bullying, weight problems, an undiagnosed autism spectrum dysfunction, and drug and alcohol habit.
On one September day, Jimmy decides to both purchase heroin for a profitable weekend or stop this thankless activity and eventually withdraw all the cash from the market. Prosecutors and legal professionals are divided on the problem, however after double-clicking the withdraw button from his Silk Street account, James out of the blue discovers that the system has allowed him to withdraw double the quantity of cryptocurrency. An quantity that, by definition, was not in his pockets.
How Zhong stole cash
Zhong instantly devised and applied a scheme to steal funds from the “inside financial institution” of {the marketplace}. He created a series of about 9 accounts with out promoting his id, with out shopping for or promoting something.
Then he funded every account with between 200 and a couple of,000 Bitcoins (BTC) — and carried out greater than 140 fast, actually inside one second, transactions to power the withdrawal processing system to switch about 50,000 Bitcoins from the cost scheme to 2 of his accounts.
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Subsequently, he periodically transferred property to many separate addresses underneath his management, so it was unattainable to hint the supply of the bitcoins and their possession. The fiat equal of the cryptocurrency James withdrew on the time of the kidnapping was $620,000.
In August 2017, 5 years after the exploit itself, because of a tough fork, Bitcoin was divided into conventional Bitcoin and Bitcoin Money. Like all different customers who had a Bitcoin stability of their digital wallets at the moment, James acquired a further 50,000 BCH, which he exchanged on a international crypto alternate for 3,500 Bitcoins. Thus, he turned the proud proprietor of about 53,500 Bitcoins, which he hid utilizing crypto mixers for nearly ten years.
Investigation
It began on March 13, 2019, with a 911 cellphone name from Zhong himself, who reported his residence had been damaged into and a whole lot of hundreds of {dollars} in cryptocurrency stolen. It performed a key position within the investigation.
In keeping with the report, an preliminary investigation into the theft from Zhong’s residence didn’t establish any suspects. The Athens-Clarke County Police Division had no expertise coping with cryptocurrencies and had issue discovering success.
Searching for solutions, Zhong turned to native non-public investigator Robin Martinelli for assist. Though Martinelli didn’t perceive cryptocurrencies, she was decided to unravel the case.
“Jimmy was a great man.”
Robin Martinelli, non-public investigator
Martinelli combed by way of the intensive surveillance system of Zhong’s residence and got here throughout a significant piece of proof – a slender determine captured on video footage from the evening of the crime.
Nevertheless, the hacker’s id remained hidden till a small misstep occurred. In September 2019, a hacker mistakenly transferred roughly $800 price of BTC to a cryptocurrency alternate that adopted established banking laws, together with know-your-customer procedures.
To the shock of investigators, the account used for the transaction was registered within the identify of Jimmy Zhong, linking him to the stolen Silk Street funds. The IRS contacted the Athens-Clarke County Police Division in search of cooperation in constructing a robust case in opposition to Zhong.
In 2019, 7 years after the fateful double “click on”, the federal government and the investigative division of the US Inside Income Service, having rigorously studied the information of the Silk Street servers, started an investigation into the placement of these very 53,500 Bitcoins that had been topic to direct confiscation in line with the decision by which the founding father of the darknet market Ulbricht was convicted in 2015.
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In November 2021, the FBI seized 50,491 Bitcoin from Silk Street, $661,900 in money, gold and silver bars, 25 Casascius cash, and 11 “extra” Bitcoins that weren’t associated to the theft from a lake home. Out of the blue, James saved his billions in a protected underneath the floorboards and on a single-board laptop wrapped in a blanket in a Cheetos popcorn tin within the toilet.
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From creator Zhong to BTC thief
The investigation discovered that Zhong, an early programmer believed to have been concerned within the growth of Bitcoin since its inception in 2009, performed a task in perfecting the expertise.
Paradoxically, the hacker who helped create Bitcoin became probably the most infamous BTC thieves in historical past. Zhong was charged with wire fraud, pleaded responsible, and was sentenced to 1 yr and someday in federal jail, efficient July 14, 2023.
Zhong was unable to maintain the illicit funds regardless of his big fortune in stolen BTC. The U.S. authorities has seized the property, initiating a course of for victims of the Silk Street hack to get their misplaced Bitcoins again.