US resident sentenced to one year and one day for Silk Road fraud involving 50,000 BTC

Judge Paul G. Gardef sentenced Georgia resident James Zhong to one year and one day in prison for the theft of 50,000 BTC from the Silk Road dark-web marketplace.

In September 2012, he ran a fraudulent scheme using fake accounts, not listing or purchasing any goods or services on the marketplace.

Zhong deposited between 200 and 2000 BTC, after which he rapidly withdrew funds in multiples. He initiated more than 140 such transactions, collectively yielding 50,000 BTC to the defendant.

On November 9, 2021, law enforcement conducted searches at Zhong’s home. They seized about 50,676 BTC ($3.36 billion at the time), $661,900 in cash, and precious-metal bars. In March 2022, he voluntarily turned over a further 1,004 BTC to authorities, which he had access to.

In November 2022, Zhong pleaded guilty to fraud using electronic means. The maximum penalty for this count is 20 years’ imprisonment.

In March 2023, the U.S. government sold 9,861 BTC for $215 million. This is only part of Zhong’s seized assets. The remaining 41,491 BTC the authorities plan to liquidate in four batches over the year.