Man Who Stole 50,000 BTC from Silk Road Asks for No Prison Time
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Man Who Stole 50,000 BTC from Silk Road Asks for No Prison Time

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11 months ago

James Zhong had hidden the Bitcoin in an underground floor safe and on a single-board computer concealed under blankets in a popcorn tin stored in a bathroom closet.

Man Who Stole 50,000 BTC from Silk Road Asks for No Prison Time

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A man who stole over 50,000 BTC from the SIlk Road marketplace is asking to be spared from prison.

The crypto stash was seized in November 2021 from the home of James Zhong — and at the time, it was the U.S. Department of Justice's second-largest seizure ever.

Zhong had hidden the Bitcoin in an underground floor safe and on a single-board computer concealed under blankets in a popcorn tin stored in a bathroom closet.

He was charged last November and pleaded guilty to one count of wire fraud — and addressing a judge in Manhattan, he said his cooperation with law enforcement should be taken into account.

Other factors raised by Zhong included the fact he is autistic and had a difficult childhood, with the defendant arguing that the crime didn't actually have a victim.

The Bitcoin that was stolen currently has a market value of about $1.4 billion, but it would have been valued well above $3.4 billion.

A sentencing memorandum submitted to the court on his behalf says:

"Jimmy is the product of a dysfunctional family and childhood. His parents, who divorced when Jimmy was in high school showed him no love or parental concern. Jimmy cannot remember the last time he exchanged a word with his sister. From childhood until high school, Jimmy was severely bullied and victimized by his peers because he was different — he was extremely shy, overweight, and most significantly, suffered from undiagnosed autism spectrum disorder."

The lawyers went on to argue that these trying personal circumstances had led him to seek solace in the world of computing, and led to him being an early adopter of Bitcoin.

While Zhong didn't actually purchase or sell items on this marketplace, prosecutors say he created nine anonymous accounts and tricked Silk Road's systems into letting him withdraw Bitcoin that he wasn't entitled to.

In one case, he deposited 500 Bitcoin — and five seconds later, made five withdrawals of 500 BTC, resulting in an overall profit of 2,000 BTC.

When it comes to the argument of why there isn't a victim, Zhong's lawyers point to how Ross Ulbricht — who created and operated Silk Road — had asked how he had managed to withdraw all of this Bitcoin.

It's claimed that — once the flaw was explained — Ulbricht even sent Zhong additional Bitcoin as a "thank you." The lawyers added:

"Jimmy committed a crime. He is remorseful for having done so. Yet, the seriousness of Jimmy's crime, or any crime is deeply intertwined with the nature of the harm caused. Here the 'harm' is to Ulbricht who only obtained control over the Bitcoin by his criminal scheme for which he is serving two life sentences plus 40 years. Ulbricht never had any right to possess the Bitcoin and is not a 'victim' in the true sense of the word."

Underlining this point, the lawyers said no investors were misled, no one lost their savings, and families weren't left unable to pay mortgages or college tuition.

Prosecutors are set to make their recommendations for sentencing by the end of this month — and Zhong is set to learn his fate on April 14.

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