US Seizes 50,000 Bitcoins

The United States Department of Justice (DoJ) stated they seized more than 50,000 bitcoin belonging to a SilkRoad hacker.

James Zhong pleaded guilty on Friday to committing wire fraud in September 2012 when he exploited a bug that allowed him to withdraw far more bitcoin than deposited by simply clicking withdraw too fast.

The coins were seized almost exactly a year ago, but are revealed only now after the guilty plea.

They were hidden “on a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet,” DoJ said.

“Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds,” U.S. Attorney Damian Williams said.

This is the second biggest seizure by the United States after 144,000 bitcoin were taken from the SilkRoad market itself.

They were auctioned in 2014-15 for just $50 million in total at an average price of about $334 per bitcoin. They’re currently worth $3 billion.

The 50,000 bitcoin seized are worth $1 billion, down from more than $3.6 billion when taken in November 2021.

They also seized 25 Casascius coins. These are very rare physical coins with actual bitcoin in them, 174 BTC.

No detail was provided by DoJ on whether they will auction the coins, or keep them as reserves to potentially fund operations.

Demand for the Casascius coins however should be very high, especially as they would come clean from the DoJ itself, yet that so much value can be held in such small coins may have its own benefits for use by the government.

It remains unclear therefore whether they will be brought to the market, or whether they will hold them, but auctioning is expected.