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How Jimmy Zhong Stole Bitcoin Worth Over $3 Billion and Then Gave Himself Away

Jimmy Zhong stole $3.6 billion worth of Bitcoin from dark net website Silk Road
UPDATED OCT 20, 2023
Jimmy Zhong has been serving his sentence at the federal prison camp in Montgomery, Alabama. Image Source: YouTube @Cybernews
Jimmy Zhong has been serving his sentence at the federal prison camp in Montgomery, Alabama. Image Source: YouTube @Cybernews

James Zhong, or Jimmy Zhong, a young computer enthusiast, almost pulled off the biggest cryptocurrency theft in history. Zhong, who discovered a software bug on an illicit website on the dark web in 2012, made about 50,000 in Bitcoin. However, years of investigation, sophisticated technology, and excellent police work helped track Zhong down to make the second-largest financial seizure in US history. Zhong, after pleading guilty, is now serving his prison sentence. 


Zhong went to the University of Georgia from 2008 to 2014 for his bachelor’s degree in computer science and mining Bitcoin. However, Zhong was involved in alcohol abuse and consumed drugs like cocaine, according to his psychiatric examination report in his court file, as per a Fortune report.


The investigation found that Zhong was among a group of early coders who worked to develop and perfect Bitcoin when it was invented in 2009. He was a smaller contributor, but he offered ideas to the early developers on key topics. In a nutshell, the person who was involved in the development of Bitcoin went on to become one of the biggest Bitcoin thieves of all time.

In 2012, Zhong came across a website called Silk Road on the dark web black market. During its operation from 2011 to 2013, Silk Road was used by numerous drug dealers and other unlawful vendors to distribute illegal drugs and other illicit goods and services. Silk Road was shut down and in 2015, its founder Ross Ulbricht was convicted by a unanimous jury and sentenced to life in prison.

However, before that, Zhong who went to the website to buy cocaine, had already stolen Bitcoin from the website worth a whopping $3.5 billion. As per U.S. Attorney’s Office, he executed a scheme to defraud Silk Road when he discovered a bug. He found out that when he clicked the withdraw button twice on the website, he would get double the amount that he was supposed to get. Thus, if he clicked twice to withdraw 20 Bitcoin, he would end up getting 40.

Zhong then created at least nine Silk Road accounts which were designed to conceal his identity and made over 140 transactions to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin.

As per the court documents, in one example Zhong made an initial deposit of 500 Bitcoin in an account and then executed five withdrawals in less than 5 seconds to gain about 2,000 Bitcoin. He then transferred the Bitcoin into different addresses to prevent detection and ownership. As of August 2017, Zhong had 50,000 BCH (Bitcoin Cash) and 50,000 Bitcoin.

With his newly earned fortune, Zhong began throwing money around. As per a CNBC report, Zhong was known for hiring private jets, throwing lavish parties, and gifting his friends thousands of dollars.

As per Fortune, Zhong spent $16 million of his money on real estate investments, luxury hotels, nightclubs, and Lamborghinis. He often stayed at fancy hotels, including the Ritz Carlton, the Plaza, and the Waldorf Astoria, according to court documents.


He shopped at Louis Vuitton, Gucci, and Jimmy Choo and owned a Tesla. He also bought a lake house in Georgia and stocked it with jet skis, boats, a stripper pole, and liquor. He even flew his friends to a game in a private jet, paid for their tickets, and gave them $10,000 for a Beverly Hills shopping spree, as per CNBC.

However, Zhong suffered a Bitcoin theft, which led to his discovery and eventual arrest.

According to CNBC, the 2012 hack was investigated by IRS officials but not much was found due to the anonymous nature of cryptocurrency. However, the case reawakened when Zhong called emergency services in Athens, GA to report theft of crypto worth thousands.

Meanwhile, Chainalysis, a blockchain analytics company that traced digital wallets containing the stolen Silk Road assets, caught Zhong transferring $800 worth of Bitcoin to a crypto exchange, which revealed his identity. With this information, the IRS found Zhong’s complaint and called the Athens-Clarke County Police Department to further the investigation.

Investigators then approached Zhong, pretending to help him with his theft complaint. In the sting operation, they discovered crucial evidence at Zhong’s residence and managed to get a look at his Bitcoin wallet where he had stored $60 or $70 million worth of Bitcoin, CNBC reported.


Zhong’s residence was raided and a computer was found which stored the stolen Bitcoin and with the help of sniffer dogs, the officials found a safe buried in concrete containing precious metals, stacks of cash, physical Bitcoin, and a wallet with Bitcoin from the theft of Silk Road in 2012. Zhong was busted.

The government forfeited about 51,680.32473733 Bitcoin valued at over $3.4 billion at the time of seizure. It was then the largest cryptocurrency seizure in the history of the US Department of Justice and it is the second largest financial seizure ever.  

In 2022, Zhong voluntarily surrendered additional Bitcoin to the government and pleaded guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.

Zhong’s lawyers appealed to reduce his prison term, claiming that he came from a dysfunctional family, he faced childhood troubles and bullying in adult life. As per the court papers, they said Zhong had no friends or family he could turn to. Further, they contended that Zhong’s actions had not hurt the government, and the Bitcoin obtained from him resulted in a profit as it would have been worth much less if it had been seized from Silk Road in 2015.

The United States Attorney for the Southern District of New York announced James Zhong was sentenced to one year and one day in prison. From July 14, 2023, Zhong has been serving his sentence at the federal prison camp in Montgomery, Alabama.