How the police caught the 50,000 Bitcoin thief on the Silk Road

Two years after James Zhong was arrested in 2012 for stealing 50,000 bitcoins (BTC) from dark web marketplace Silk Road, stories have surfaced that led to his arrest.

According to CNBC, Zhong was a computer expert and lived a luxurious life. He drove expensive cars, including a Tesla, partied a lot, stayed in fancy hotels, shopped at luxury stores, and had an unusually strict home surveillance system in his off-campus bungalow. He also bought a second home – a lake house in Gainesville, Georgia with a dock, boats, jet skis, a deckchair and lots of booze.

Crash and call the police

In the year On March 13, 2019, Zhong called the Athens-Clarke County Police Department in a panic; A man broke into his house and stole 150 BTC worth hundreds of thousands of dollars.

Zhong's complaint was the police department's first crypto case, and because they were unfamiliar with the growing sector, the case did not progress, and no suspects were arrested. As a result, Zhong hired the services of local private investigator Robin Martinelli, who investigated whether one of her client's friends was responsible for the theft.

However, the now 28-year-old Silk Road swindler refused to believe Martinelli's theories because he found it difficult to accept that someone close to him could have betrayed him.

As Zhong tries to solve the theft case, a team of agents from the Internal Revenue Service's Criminal Investigation Division in In 2012, they tried to solve the Silk Road theft. They wait for years while the criminal transfers the money from account to account, using crypto-mycators to obscure the direction of the assets.

Unfortunately, Zhong mistakenly transferred $800 to one of his accounts during that time. This was spotted by blockchain analytics company Chinalysis, which tracked the money to a Know-Your-Customer crypto exchange and discovered that the account was registered under Zhong's name. This happened six months after Zhong called the police to report the BTC theft.

The prison

For further investigation, the IRS requested the assistance of the Athens-Clarke County Police Department. The agencies teamed up with three detectives who approached Zong under the pretext of investigating the alleged crime. But they were investigating the theft of Silk Road bitcoins.

Zong reveals them and tours the apartment as they search for hidden rooms. Finally, he opened the laptop and saw $60 million to $70 million worth of BTC, which was enough evidence that he was behind the 2012 theft.

When asked, Zhong said he got into BTC earlier and mined thousands of his crypto assets. In fact, he turned out to be one of the earliest group of coders to engage with Bitcoin technology.

After all was said and done, the detectives arrived at Zong's house days later with a team of officers raiding the apartment looking for evidence. With the help of dogs trained to sniff out electronics, authorities found a popcorn tin hiding a computer containing millions of dollars worth of BTC, cash, precious metals and physical bitcoins.

Zhong was extradited, convicted, and is currently serving a one-year sentence in a federal prison in Montgomery, Alabama. US officials are selling the looted property after the owners refuse to claim it.