Thief who stole $3.5 billion but lost all in one phone call part 2

The following year, the owner of Silk Road was arrested and the FBI shut down the website, seizing about 170,000 Bitcoins. However, 51,680 Bitcoins were still missing, and investigators had been trying to trace them for years.

The cybercrime unit suspected that Jimmy Zhong might somehow be connected to those stolen Bitcoins. To confirm this, the police arranged another meeting with him. Since they were already investigating the $400,000 theft, the meeting did not seem unusual to Jimmy.

Three plain-clothes officers wearing body cameras visited his house. They assured him they were only investigating the stolen money. During the conversation, they asked about his source of income. Jimmy took them to his room and showed them two Bitcoin mining machines.

However, a blockchain expert in the cybercrime team immediately realized that two mining machines could never generate the amount of wealth Jimmy was spending. While distracting him with conversation, one officer secretly accessed Jimmy’s laptop and copied one of his Bitcoin wallet addresses.

Although it was only one of many wallet addresses, it was enough. The transaction history connected directly to the Silk Road hack from years earlier. Investigators were now sure that Jimmy had some connection with the stolen Bitcoins.

They contacted him again, but this time they arrived with a search warrant. When Jimmy saw the warrant, the color drained from his face. Officers began searching the entire house carefully, even tapping the floor tiles to check for hidden compartments.

Eventually they noticed a Cheetos snack container with a small towel inside it. Seeing a towel inside a snack container made them suspicious. When they removed the towel, they found a tiny computer chip underneath.

It was a hardware Bitcoin wallet.

Inside it were about 51,000 Bitcoins—worth around $3.5 billion in 2020.

Jimmy Zhong was now completely trapped. Ironically, while trying to recover the $400,000 he claimed had been stolen, he ended up losing billions of dollars in Bitcoin.

Jimmy confessed that he used to buy drugs from the Silk Road marketplace. In 2012, while withdrawing his own Bitcoins from the website, he discovered a loophole in the system. Since he already had good knowledge of blockchain technology, he used that loophole to repeatedly withdraw Bitcoins belonging to other users.

Eventually he managed to withdraw 51,680 Bitcoins. At that time, their total value was only a few hundred thousand dollars. The owner of Silk Road later contacted Jimmy privately and asked how he had found the loophole. Jimmy explained the flaw in the website, and in exchange the owner allowed him to keep the stolen Bitcoins.

Years later, the case was finally solved. In 2023, Jimmy Zhong was sentenced to one year and one day in prison for wire fraud. This is considered one of the largest Bitcoin thefts in U.S. history.

If Jimmy had never called 911, he might still be living freely with his Bitcoins. But that single phone call brought him crashing from the sky to the ground.

After recovering the Bitcoins, the FBI announced that anyone who had lost money in the 2012 Silk Road hack could come forward and claim it. But surprisingly, not a single person came forward.

Because claiming the money would mean admitting they had an account on Silk Road—and that would mean they were involved in illegal activities.