Jimmy Zhong: the unknown. China's Robin Hood, who stole (and then lost) $3+ billion worth of bitcoins

In 2012, someone stole 50,000 bitcoins from Silk Road, an illegal dark web marketplace. Since then, the value of the stolen bitcoin has soared to over $3 billion and remained one of the biggest mysteries in the cryptocurrency world. The fraudster was not arrested until November 2022.

CNBC published the story of the life and arrest of Jimmy Zhong, who came to study in the USA from China and disguised himself as a wealthy student living near the University of Georgia campus in Athens and tried not to miss local parties.

The Call that Triggered Events

It all started on March 13, 2019, with a phone call to 911 from Zhong himself, who reported a break-in at his home and the theft of hundreds of thousands of dollars in cryptocurrency. This later played a key role in the investigation.

The police couldn't solve the crime, so Jimmy hired private detective Robin Martinelli, who concluded that the theft was likely committed by someone familiar to him, as they were very familiar with the layout of the suspect's house, as shown by surveillance footage. However, Zhong refused to believe this, as Martinelli reported, he wanted to be loved and was very upset at the thought of betrayal by one of his friends.

Jimmy was a good guy.

A Lavish Lifestyle

Many people in Athens shared this opinion. Several years prior, Zhong was quite well-known in the city as a man who splurged money – buying drinks for everyone at the bar and such. And although Jimmy lived in a relatively modest house by local standards (he also had one on the lake with jet skis and boats), he frequented luxury hotels and bought items from elite brands such as Louis Vuitton, Gucci, and Jimmy Choo, drove a Tesla, and had other attributes of a rich man.

In 2018, he gathered friends and flew them on a private jet to Los Angeles, where his favorite team, the Georgia Bulldogs, was playing at the Rose Bowl stadium. Before that, he gave each of them $10,000 for pocket expenses in LA. However, he had no job and no other known sources of income. He told his friends that he had been involved in bitcoin almost since its creation in 2009 and had mined thousands of coins when it was much easier.

Investigation and Investigator Tricks

While they were having fun in Los Angeles, the IRS criminal division was actively monitoring him, suspecting Jimmy's involvement in the largest cryptocurrency theft in history, the 2012 Silk Road hack where 50,000 bitcoins were stolen. Investigators were able to track cryptocurrency transactions, as they are public by default. However, identifying the owner's identity proved elusive; they had to wait for a mistake. It finally happened in September 2019 – Zhong transferred $800 to a cryptocurrency exchange that followed banking rules requiring customer authentication.

But this wasn't enough. The IRS contacted the police in Athens-Clarke County, who were investigating the robbery. Under the pretext of additional evidence, officers went to Jimmy's house, who enthusiastically tried to help the investigation.

The suspect explained in detail how his security system worked and disclosed where his valuables were. Investigators searched the floor and cabinets for hidden compartments and asked him to turn on his laptop and show how he acquired bitcoins. Jimmy easily showed one of his wallets with a balance of $60-70 million.

This was enough to obtain an official warrant. Police found a metal canister of popcorn with a hidden computer containing another crypto wallet. They also located a buried safe in the floor with precious metals, piles of cash, and "physical" bitcoins minted in the early years of cryptocurrency. Finally, they found a wallet with bitcoins linked to the Silk Road hack in 2012.

OG Jimmy Zhong

The investigation finally learned details about Jimmy. In cryptoslang, he belonged to the OG, or Original Gangster, a group of early programmers who worked on improving the technology created by Satoshi Nakamoto. Researchers concluded that Zhong contributed to the bitcoin source code, particularly suggesting ways to reduce blockchain size.

His high level of technical knowledge evidently allowed him to pull off one of the largest heists in history. However, the money was confiscated by the state (since Silk Road drug dealers couldn't officially report the crime), and Zhong is currently in a correctional facility in Alabama. Sadly, his 13-year-old dog named Chad is left without an owner.