The incredible story of Jimmy Zhong: the hacker who stole 50,000 bitcoins from the online drug market Silk Road

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In this article, we retrace the steps in the gripping story of Jimmy Zhong, an American citizen who is believed to have hacked the online darknet drug market ‘Silk Road’ and managed to steal over 50,000 bitcoins.

This is a stratospheric sum which, at the time of Jimmy’s arrest by the Internal Revenue Service Criminal Investigation (IRS), was worth $3.36 billion.

Between 2012, the year of the Silk Road attack, and 2019, the year of his arrest, the hacker had squandered millions of dollars on parties, travel, expensive cars and designer clothes, mainly in the hope of making friends and feeling appreciated.

Jimmy is now 33 years old, and as of 14 July 2023, he is serving his sentence of 1 year and 1 day in federal prison in Montgomery, Alabama.

Jimmy Zhong and the theft of bitcoins from the Silk Road darknet market

Jimmy Zhong is a US citizen, born on 24 May 1990, who managed to compromise the security systems of the Silk Road darknet marketplace between 2011 and 2012, taking home a whopping 50,000 bitcoins.

While Ross Ulbricht, the founder of the cryptocurrency-based online drug market, was arrested in 2013 and sentenced to life in prison, Jimmy was only unmasked by the US federal authorities in November 2021 and sentenced to one year in prison.

The latter, who was nothing more than an IT enthusiast who joined the bitcoin community in 2009, had noticed in the early days of Silk Road that the platform had a bug in the payout system.

By exploiting this flaw, he was able to withdraw large amounts of bitcoins in tranches of 200-2000 on the black market over a period of just under two years.

In total, he withdrew around 50,000 BTC, initially splitting the loot between 11 different cryptocurrency wallets.

Il seguente grafico fornito da Chainalysis raffigura il flusso di fondo dal portafoglio di Silk Road a quelli di Jimmy Zhong.

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For the first year after the US arrest, he did not use the stolen funds and then began moving them around through small transactions and by taking steps to protect his identity.

He used bitcoin mixers, for example, which made it impossible to trace the incriminated coins and prevented US federal agents from discovering them for nine years.

The cryptocurrencies were then divided into two wallets, one containing 40,000 bitcoins and the other 10,000, once the history of past transactions had been erased.

We should also remember that in 2017, Bitcoin’s fork protocol, Bitcoin Cash, gave all BTC holders an equivalent in BCH, which Jimmy cleverly converted shortly afterwards, giving him an additional 3,500 BTC.

Although Jimmy Zhong actually stole 50,000 bitcoins from Silk Road and spent some of this digital money over the years enjoying life, thanks to the history of the Bitcoin Cash fork, at the end of the day more coins were found than were originally stolen.

However, some of this surplus was confiscated in the years following his arrest.

Zhong’s hectic and luxurious life between 2012 and 2021 and the desperate search for attention in his social circle

Jimmy Zhong, according to the reconstructions of federal agents involved in the maxi operation that led to his arrest, was basically a “good guy”.

The Silk Road hacker spent mountains of money around Athens-Clarke County, Georgia, buying anything and everything that came his way.

Despite living in a small bungalow near the Athens student campus, he stayed in luxury hotels such as the Ritz Carlton, the Plaza and the Waldorf Astoria.

Although he had no special income, he had bought luxury clothes, expensive cars and a second lake house in Gainesville.

He also attended countless parties where alcohol was the one ingredient that was never lacking.

Jimmy told those who asked him about his financial fortune that he was one of the first to buy bitcoin in 2009 and that he had made millions and millions of dollars from his early adopter investments.

jimmy zhong bitcoin

Whatever Jimmy did, however, he did it with one goal in mind: to win the approval of his social circle and make a lot of friends.

Unfortunately for him, he had been bullied as a child, and because of his unathletic appearance and the autism he suffered from, he had never known the joys of social life or been socially accepted.

With money in his pocket, everything changed for him, as he offered all his friends tens of thousands of dollars just to get a smile from them.

In 2018, for example, when his beloved Georgia Bulldogs football team was playing in the Rose Bowl, Zhong gathered a small group of friends for a pilgrimage to Los Angeles. 

Jimmy Zhong chartered a private jet and gave each of his friends up to $10,000 to go shopping in Beverly Hills.

jimmy zhong bitcoin

His desire for social acceptance was so strong that he preferred not to face reality and believe those who told him that his friends were only using him for money.

One day in 2021, after his home was burglarised and he lost around 150 bitcoins, Jimmy contacted a private investigator in Longaville, who started keeping tabs on all his friends.

After discovering that one of the millionaire’s friends was the prime suspect in the theft, the private investigator explained the situation to Jimmy.

But Jimmy did not want to hear it. 

The detective recounted this in a book he wrote after the story broke:

“He would have been furious if I had told him that someone should know where the money was. Jimmy wanted to be loved, Jimmy wanted friends.

The special operation to arrest Jimmy Zhong and confiscate the bitcoin loot

Unfortunately, Jimmy Zhong’s good life, financed by the drug proceeds from the Silk Road market he had hacked, came to an end shortly after he was robbed by his ‘friend’.

In the same year, he made a big mistake that cost him the end of the billionaire dream he had been living for nine years.

One day, blockchain monitoring company Chainalysis noticed that $800 in bitcoin with obvious links to the SIlk Road hack had been moved to a cryptocurrency exchange that required KYC registration from its users.

Immediately, the owners of the exchange in question were questioned by US investigators trying to determine the identity of the darknet hacker, and the subject’s full name and address surfaced.

However, this evidence was not enough to frame Jimmy, and federal agents needed more evidence to bring him to justice.

Through the cooperation of the Internal Revenue Service Criminal Investigation, the Athens-Clarke County Police Department, the cyber intelligence company BlockTrace, and the involvement of Special Agent Trevor McAleenan, Jimmy Zhong was framed.

The group allegedly approached Zhong with a ruse, telling him they were investigating the crime he had reported a few months earlier, in which a thief had stolen hundreds of thousands of dollars from one of his bitcoin wallets.

After meeting Jimmy and learning more about his condition, law enforcement officials were able to get everything they needed to charge him.

In particular, the Silk Road hacker showed them that he had $60 or $70 million in one of his bitcoin wallets as a gesture of bravado, as well as showing them his personal flamethrower, his bar equipped with a stripper set, and dozens of very expensive memorabilia.

During the visit to Jimmy’s home, law enforcement officers pretending to help the boy inserted a device known as a ‘jiggler’ into Zhong’s laptop, which caused the cursor to move continuously, giving law enforcement access to the computer’s password-protected contents.

A few days later, the authorities swooped on his home with a search warrant and rammed his gate with a car, catching the bitcoin thief off guard, preventing him from shutting down his PC and denying him access to his wallets.

Had he noticed the raid, he would have been able to act quickly and secure his crypto loot.

In the end, 50,491 bitcoins, worth around $3.36 billion, were found in a popcorn box with a computer hidden inside.

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Agents also recovered more than $660,000 in cash, precious metals and 25 Casascius coins, which are physical representations of bitcoin that contain private keys to access real bitcoin. 

During the course of the investigation, he voluntarily surrendered an additional 861 bitcoins in March 2022 and May 2022.

Jimmy Zhong, the billionaire hacker in search of friends, was finally sentenced to 1 year and 1 day in federal prison in Montgomery, Alabama.

He will begin serving his sentence in April 2023.