The US Department of Justice (DOJ) has made its largest ever seizure of cryptocurrency after tracing the proceeds of a sophisticated wire fraud to a circuit board hidden in a popcorn tin. The $3.36bn haul is the second largest financial seizure of any kind made by the DOJ.

The proceeds were recovered from the home of James Zhong, who has pled guilty to unlawfully obtaining 50,000 bitcoin from the dark web site Silk Road a decade ago. The whereabouts of the missing bitcoin had been a much discussed mystery for years.

Multiple transactions

Zhong created a series of nine Silk Road accounts in an attempt to conceal his identity. He then triggered 140 transactions in quick succession to trick the site’s withdrawal-processing system into releasing some 50,000 bitcoin into his accounts, before transferring the proceeds into separate accounts he controlled.

Five years after the fraud, bitcoin split into two currencies, traditional bitocoin and bitcoin cash (BCH). This replicated balances held on the Bitcoin blockchain. Zhong exchanged all the BCH proceeds for additional bitcoin.

Money laundering and drugs

Silk Road was an online black market notorious for money-laundering and the buying and selling of illegal drugs with bitcoin. It was shut down in 2013 and its founder, Russ Ulbricht, given a life sentence in 2015.

The raid on Zhong’s house also recovered $661,900 in cash, 25 physical Casascius coins, a handful of gold and silver bars and an additional 11.116 bitcoin. The charges carry a maximum penalty of 20 years in prison.

U.S. Attorney Damian Williams 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. This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”