Silk Road Darknet Debacle: Over 50,000 BTC Worth Over $1 Billion Recovered

Kutl Ahmedia

The US government has announced one of its largest-ever cryptocurrency recoveries after discovering 50,676 Bitcoins connected to the infamous Silk Road dark web bazaar. At the time of writing, the value of the recovered Bitcoin is very close to $1.04 billion (or around Rs. 8,228 crore). Damian Williams, the US Attorney for the Southern District of New York, reaffirmed the specifics. Ross Ulbricht, who is currently incarcerated, established Silk Road, an online bazaar on the dark web, in 2011.

The bitcoin was recovered from a Georgia address linked to James Zhong. Other goods taken from Zhong's hands included precious metals and $661,900 (approximately Rs. 5 crore) in cash.

A post by the US Department of Justice (DoJ) stated that Zhong "executed a scheme to defraud Silk Road of its money and property in September 2012 by creating a string of approximately nine Silk Road accounts in a manner designed to conceal his identity, triggering over 140 transactions in rapid succession to trick Silk Road's withdrawal-processing system into tricking approximately 50,000 Bitcoin from its Bitcoin-based payment system into Zhong's accounts."

Later, Zhong transferred the Bitcoins into numerous different addresses that were all under his control.

The defendant admitted guilt to carrying out this wire fraud in 2012.

"Law enforcement discovered and retrieved this impressive hoard of criminal proceeds thanks to cutting-edge cryptocurrency tracing and good old-fashioned detective work. This prosecution demonstrates that we will continue to pursue the money, regardless of how well it is concealed, the DoJ noted in its blog post.

When it first opened in 2011, the Silk Road marketplace allowed customers to use Bitcoin to buy anything, including illegal drugs.

To pay for his legal fees, the project's imprisoned inventor, Ross Ulbricht, has been auctioning off some of his prison-produced artwork as NFTs.

Since being given two life terms in jail in October 2015, Ulbricht has remained behind bars.

In the meantime, US authorities are taking action to prevent cryptocurrency operations from being used as a secure instrument by fraudsters to commit financial crimes.

A seasoned prosecutor of computer crimes was chosen by the DoJ in February of this year to head its brand-new national cryptocurrency enforcement division.

The US government had then accused a married New York couple of allegedly laundering Bitcoins, which were then worth over $4.5 billion (roughly Rs. 33,750 crore). These were taken in the Bitfinex hack that took place in 2016.

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