In 2012, a staggering 50,000 Bitcoin (BTC) had been stolen from the notorious Silk Street, a bootleg darkish internet market. Over time, the worth of the stolen BTC skyrocketed to $3 billion, making it some of the vital mysteries in cryptocurrency.
Nevertheless, practically a decade later, a essential mistake by the thief led to a breakthrough within the case, permitting the IRS-CI (Inner Income Service Legal Investigation) to crack the puzzle.
CNBC has obtained unique footage that reveals how investigators meticulously linked the dots, in the end resulting in the unmasking of the perpetrator behind the Bitcoin heist.
Silk Street Bitcoin Heist Unraveled
The story begins in Athens, Georgia, an unsuspecting faculty city conversant in typical misdemeanors. On the evening of March 13, 2019, 28-year-old Jimmy Zhong, a neighborhood laptop professional, made an uncommon 911 name to report the theft of tons of of 1000’s of {dollars}’ price of Bitcoin from his dwelling.
Per the report, the investigation into the theft from Zhong’s residence initially yielded no suspects. The Athens-Clarke County Police Division, inexperienced in crypto-related circumstances, struggled to make headway.
In a quest for solutions, Zhong sought the help of native personal investigator Robin Martinelli. Though not well-versed in cryptocurrencies, Martinelli was decided to crack the case.
Martinelli meticulously examined Zhong’s in depth dwelling surveillance system and stumbled upon a vital piece of proof—a slender determine captured within the footage from the evening of the crime.
Little did Zhong know that whereas reporting his stolen Bitcoin, a workforce of IRS brokers labored tirelessly to resolve the 2012 Silk Street hack.
Nevertheless, the hacker’s id remained hid till a tiny slip-up occurred. In September 2019, the hacker mistakenly transferred round $800 price of BTC to a cryptocurrency change that adhered to established banking laws, together with “know your buyer” procedures.
To the investigators’ shock, the account used for the transaction was registered in Jimmy Zhong’s identify, linking him to the stolen Silk Street funds. The IRS contacted the Athens-Clarke County Police Division, searching for collaboration to construct a stable case towards Zhong.
United by a shared goal, Lt. Jody Thompson, IRS-CI particular agent Trevor McAleenan, and Shaun MaGruder, CEO of cyber intelligence firm BlockTrace, shaped a workforce.
Armed with proof, they obtained a federal search warrant for Zhong’s residence. On November 9, 2021, a big workforce of officers raided Zhong’s dwelling, delivering the stunning information that he was the prime suspect.
From Creator To Thief?
Investigations revealed that Zhong, an early coder allegedly concerned within the improvement of Bitcoin since its inception in 2009, had performed a job in perfecting the expertise.
In an ironic twist, a hacker concerned within the creation of Bitcoin had reworked into some of the outstanding BTC thieves in historical past. Zhong was charged with wire fraud, pleaded responsible, and acquired a sentence of 1 yr and a day in federal jail, beginning on July 14, 2023.
Zhong couldn’t retain the illicit funds regardless of his immense fortune in stolen BTC. The US authorities seized the belongings, initiating a course of for victims of the Silk Street hack to reclaim their misplaced Bitcoin.
Nevertheless, no claimants got here ahead, and the federal government offered the seized Bitcoin, with the proceeds prone to be shared with the Athens-Clarke County Police Division as a token of appreciation for his or her help.
In his assertion to the choose, Zhong admitted that the stolen Bitcoin had made him really feel essential, however in the end, his actions had solely benefited the federal government financially.
Whereas the unique crime of the Bitcoin theft from Zhong’s Athens residence stays unsolved, the arrest and conviction of Zhong have introduced closure to some of the vital cryptocurrency crimes of our time.
Featured picture from Shutterstock, chart from TradingView.com