Zhong James, a Georgia-based miner, was sentenced to jail for a year by the New York Department of Justice. Thirty-two-year-old miner pleaded guilty in a case related to the Silk Road Darknet marketplace breach.
James established 9 different Silk Road accounts solely for hacking and illegitimate purchases; he obtained 50,000 BTC at a cost ranging between 200 BTC and 2000 BTC. He used Bitcoin mixing Service, an international cryptocurrency exchange and a technological tool to foil tracking of the process.
He obtained 50,000 Bitcoin Cash when Bitcoin was forked from Bitcoin in August 2017 and further got bifurcated in November 2018 into two currencies Bitcoin Cash and Bitcoin SV and exchanged entirely using an overseas cryptocurrency exchange for 3500 BTC.
The funds were stored secretly at James’s residence in Georgia. The authorities separately seized approximately 51,351.89785803 bitcoin precious metals and $661,900 in cash. Additionally, officials took Zhong’s 80% interest in RE&D Investments, a Memphis firm with substantial real estate holdings.
Silkroad DNM is the world’s first Darknet Market launched in 2011. It operates online as a hidden service on the Tor network. Tor Network, short for “The Onion Router”, is a free and open-source software for enabling anonymous communication, released in 2002.
DNM allows users to buy and sell products and services between each other anonymously. All transactions were conducted with Bitcoin. The website was known for its illegal drug marketplace, among other illegal and legal product listings.
The fraud highlights a series of issues involved with cryptocurrencies that include difficulty in establishing regulation of cryptos, problems related to the opaque nature of the Darknet and issues with inherent Price value and Price volatility.
