In November 2022 you could read in the Bitcoin news that the American Department of Justice (DOJ) announced that it had seized more than 50,000 bitcoin (BTC) a year earlier. The US government has now started to liquidate this huge bitcoin position.
Seized Silk Road BTC is being sold
In fact, in November 2021, the DOJ seized 51,351.17 BTC from a bitcoin trader named James Zhong. Zhong had stolen this bitcoin asset in 2012 from Silk Road, an illegal online marketplace. Silk Road was a website on the dark web where people could surf anonymously. It was often used for the trade in illegal products such as drugs and weapons. To ensure anonymity, BTC was used as a means of payment. Partly because of this, bitcoin gained its reputation as a currency for criminals.
Zhong allegedly committed fraud by making quick transactions that misled Silk Road’s payment system. At the time, bitcoin still had a value that varied between $1 in 2011 and $13.50 in 2012
A application dated March 31 in the U.S. District Court for the Southern District of New York regarding Zhong’s conviction stated that the U.S. government had begun liquidating the seized bitcoin. As of March 14, 9,861 BTC was sold for $215.7 million, according to the filing.
The government plans to liquidate the remaining 41,490 BTC, which is worth nearly $1.2 billion at current bitcoin prices, in four moments over the course of this calendar year. However, the second round of liquidation will not take place before the date of Zhong’s sentencing.
Zhong pleaded guilty to stealing BTC
In November, Zhong confessed to committing fraud in September 2012. It ended up being one of the largest government crypto seizures until the February 2022 recovery of approximately $3.6 billion related to the 2016 Bitfinex hack.