Bitcoins confiscated by the US Department of Justice were spotted transferring more than 9K BTC valued at $300 million from two Silk Road-related addresses, on-chain data showed. On March 14, the U.S. government sold 9,800 BTC. It has since announced plans to sell another 41,500 BTC tied to Silk Road in four batches over the course of a year.
Silk Road, reportedly the first contemporary darknet market, was launched in 2011. The controversial platform gained notoriety in 2012 after the FEDs seized more than 50,000 bitcoins from one Georgia native, James Zhong, who had just pleaded guilty to wire fraud for illegally purchasing the tokens from the dark web market.
The amount of Bitcoin, roughly $3.37 billion, that was confiscated was the greatest cryptocurrency haul in Department of Justice history. U.S. Attorney Damian Williams detailed how Zhong created an elaborate scheme for almost ten years to evade capture.
Zhong distributed the tokens among numerous accounts and various addresses, or Bitcoin wallets, by opening at least nine fictitious accounts and executing over 140 transactions quickly. Williams said the accused initially deposited between 200 and 2,000 BTC to start an account and, within moments, initiated rapid withdrawals for the amount of BTC used to fund the account.
Since he would be triggering multiple withdrawals, the system was unable to maintain a count of how many withdrawals were made. “Thanks to state-of-the-art cryptocurrency tracing, law enforcement located and recovered this impressive cache of crime proceeds,” Willams stated.
Bitcoin Dumping Scare
On November 9, 2021, IRS agents discovered “50,491.06251844 Bitcoin of the roughly 53,500 Bitcoin Crime Proceeds” in an underground floor safe and on a single-board computer that was hidden under blankets in a popcorn tin stashed in a bathroom closet.
Zhong received a one-year prison term for carrying out the scheme to steal more than 51,680 Bitcoins, which were worth more than $3.4 billion at the time of seizure and over $1.5 billion now.
The end of June saw thousands of bitcoins related to the Silk Road marketplace moving around, which caused great concern among cryptocurrency investors. According to data from Arkham Intelligence, the wallet bc1qzd8 moved 10.298 BTC in three-hour intervals to what they believe to be an exchange deposit wallet that has only ever been used by known Zhong confiscation addresses.
Ki Young Ju, the CEO of Cryptoquant, disputed the assertion and said that “bc1qzd8…” is not likely to be a label error because it is not controlled by the US government.