FBI seizes $3.36 billion stolen from Silk Road a decade ago

Bitcoin Price Move

In 2012, the illegal market closed by the FBI in 2013, Silk Road, saw 50,676 Bitcoins stolen. After a decade, the feds seize $3.36 billion stolen from the Silk Road in one of the largest seizures in history.

James Zhong pleaded guilty to wire fraud for the 2012 robbery and was sentenced by the United States Department of Justice to a maximum sentence of 20 years in prison. The seizure of 50,676 Bitcoin became the second largest in history. Second only to the seizure after the Bitfinex hack in 2016.

Feds seize $3.36 billion stolen from Silk Road. The second-largest seizure in history

Following the raid and the seizure of the $3.36 billion, US Attorney Damian Williams commented, “For nearly ten years, the whereabouts of this huge chunk of missing Bitcoin had remained a $3.3 billion-plus mystery.”

Silk Road is an illegal buying and selling site launched in 2011 and shut down by the FBI in 2013. Its founder, William Ulbricht, is serving a life sentence in prison after the website’s shutdown. The seizure of the $3.36 billion by US authorities sends a clear message to cyber criminals. Increasingly there are cases where the cooperation between exchanges and crypto companies with the authorities lands cyber criminals in jail.

In Silk Road the currency to carry out transactions was cryptocurrencies. Thanks to this, the United States government began to carry out more exhaustive monitoring of illicit activities that used cryptographic platforms.

The “sophisticated scheme” was described by Special Agent in Charge Tyler Hatcher of the Internal Revenue Service – Criminal Investigation in a press release as follows:

Zhong created nine accounts on the website, funding each between 200 and 2,000 Bitcoin. Subsequently, he executed 140 quick transactions by tricking the withdrawal processing system, freeing around 50,676 Bitcoin. After they were in his accounts, Zhong withdrew them to his Bitcoin wallet addresses, making it difficult to seize the funds.

Is the crypto ecosystem really safe?

Zhong’s attack took place a decade ago and until a year ago the whereabouts of the 50,676 he had stolen from Silk Road were a mystery. It would not be the first time that large players in the ecosystem have suffered attacks that have caused losses exceeding billions of dollars.

It could be a political strategy announcing that the Feds have seized $3.36 billion from the theft over a decade ago. This occurs when the cryptocurrency market is at a critical point. However, the seizure of stolen $3.36 billion is always good news. Although this may mean the creation of a Bitcoin Whale that could manipulate the market.

In March 2022, the Mavis Hub’s Ronin Network suffered an attack where more than $600 million dollars were stolen. A similar scenario occurred with Binance a month ago, where a cross-bridge chain platform, BSC Token Hub, suffered an attack resulting in losses initially amounting to $570 million.

Although in most cases these losses are mitigated and confiscated by the authorities, they generate an impact on the crypto ecosystem from which it is very difficult to recover. Confidence after the fall of Luna and Terra this year also took a hit.

In a report published by Chainalysis, as of July 2022, hackers had stolen more than $1.9 billion worth of services, cryptocurrencies, and digital assets. On the other hand, in 2021, by the same date, $1.2 billion had been stolen, which represents a significant increase in criminal activities in the area.