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Silk Road Hacker Hid 50,000 Bitcoins in Popcorn Tin & Floor Safe


November 08, 2022

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Silk Road Hacker Hid 50,000 Bitcoins in Popcorn Tin & Floor Safe

The US Justice Department has announced a historic $3.36 billion seizure and conviction, in connection to the now-defunct underground marketplace Silk Road.

Named publicly for the first time since the feds raided his place a year ago, James Zhong, a real estate developer, faces time in prison for exploiting a software vulnerability to steal more than 50,000 Bitcoins, valued at $3.36 billion at the time.

This seizure was the largest in the history of the US Department of Justice at the time of the raid, and today remains the department’s second-largest financial seizure ever, just behind a ​​$3.6 billion seizure earlier this year from a married couple charged with money laundering.

From the DOJ press release:

In September 2012, ZHONG executed a scheme to defraud Silk Road of its money and property by (a) creating a string of approximately nine Silk Road accounts (the “Fraud Accounts”) in a manner designed to conceal his identity; (b) triggering over 140 transactions in rapid succession in order to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin from its Bitcoin-based payment system into ZHONG’s accounts; and (c) transferring this Bitcoin into a variety of separate addresses also under ZHONG’s control, all in a manner designed to prevent detection, conceal his identity and ownership, and obfuscate the Bitcoin’s source.

Five years later, his ill-gotten fortune had grown even bigger, as the Bitcoin hard fork coin split generated a matching amount of 50,000 Bitcoin Cash units. After quickly laundering those funds as well, Zhong sat on 53,500 Bitcoin in crime proceeds.

On Nov. 9, 2021, police located and raided Zhong’s residence in Gainesville, Georgia, where they found electronic equipment holding most of the digital currency in an underground floor safe and “on a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet.”

Law enforcement also recovered $661,900 in cash, 25 Casascius coins (physical Bitcoin) with an approximate value of 174 Bitcoin, 11 additional Bitcoin, four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin.

“James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road,” said US Attorney Damian Williams. “For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.  This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”

The 32 year-old pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison. At current prices, the fed’s forfeiture is worth around $1 billion.




Filip has 15 years of experience in technology journalism. In recent years, he has turned his focus to cybersecurity in his role as Information Security Analyst at Bitdefender.

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