From Bitcoin developer to epic thief: How James Zhong stole $3 billion over ten years

In 2012, the Silk Road was hacked, and 50,000 bitcoins vanished into thin air. The stolen funds left digital footprints on the blockchain, with their value once soaring to over $3 billion, becoming one of the most mysterious cases in cryptocurrency history. It wasn’t until 2019 that an unassuming 911 emergency call finally uncovered the truth behind this colossal theft.

The Dual Identities of the Party Boy and the Mysterious Hacker

In Athens, Georgia, James Zhong is a well-known figure—a wealthy party boy who spends lavishly. He rents a modest house outside of campus but frequents five-star hotels like the Ritz-Carlton and the Plaza. He buys drinks for the entire bar, spending hundreds of dollars that vanish in seconds into the throats of revelers. When the Georgia Bulldogs won the Rose Bowl in 2018, he went all out—hiring private jets, booking high-end Airbnbs, and giving each friend $10,000 in shopping money.

However, this seemingly extravagant party king had no obvious source of income. He claimed to have entered the Bitcoin space as early as 2009, boasting that he mined thousands of coins during the early days of the technology. In reality, James Zhong was indeed an “OG” in the Bitcoin world—he contributed to the development of Bitcoin’s core code and proposed ideas for blockchain optimization to early developers. A double life of a tech figure quietly unfolded.

The Turning Point in 2019: Lies Exposed

On the night of March 13, 2019, 28-year-old James Zhong called 911. He claimed that his home had been robbed of cryptocurrency worth hundreds of thousands of dollars and hurriedly told the dispatcher he was experiencing a panic attack. The call prompted local police to investigate, but the Athens-Clarke County Police Department knew little about the crypto world, and the case stalled.

Zhong then hired private investigator Robin Martinelli. A former deputy sheriff now working surveillance with a prosthetic limb, she started by monitoring his home’s security footage. She spotted a tall male figure who seemed unusually familiar with the homeowner’s residence. Martinelli suspected the thief was a member of Zhong’s circle of friends—whom she described as “very casual, plastic, not very concerned,” seemingly taking advantage of Zhong’s generosity.

Eventually, Martinelli focused on a suspect believed to have stolen 150 bitcoins (worth nearly $600,000 at the time). But Zhong refused to accept this conclusion. Martinelli later recalled: “Jimmy wanted to be loved, Jimmy wanted friends.” He couldn’t bear the betrayal by his close friends.

The Federal Agents’ Strategy: Uncovering the Truth

While local police made little progress, agents from the IRS Criminal Investigation (IRS-CI) uncovered clues. Blockchain analysis firm Chainalysis traced the stolen funds, worth about $800, to a cryptocurrency exchange that implemented “Know Your Customer” (KYC) procedures. The account holder was James Zhong, with the transaction occurring in September 2019—six months after he reported the theft.

This lead connected to an old case from ten years prior. IRS-CI agent Trevor McAleenan and Shaun MaGruder, CEO of BlockTrace, decided to set a trap. They contacted Athens police and devised a plan: to approach Zhong under the pretense of investigating the stolen bitcoins, while actually confirming whether he was the true Silk Road thief.

The Home Search: Mountains of Evidence

According to body camera footage obtained, when the three investigators knocked on Zhong’s house by Lake Gainesville, he greeted them warmly. He believed these “helpers” were there to assist with his Bitcoin case and even invited them to a party as a token of gratitude.

During the inspection, investigators secretly searched for secret rooms and hidden devices. They examined the basement bar and dance pole, scrutinizing every aspect of the security system. When Zhong was asked to open his laptop, MaGruder was stunned to find that it contained Bitcoin wallets worth $60 million to $70 million.

The initial visit secured a federal search warrant. On November 9, 2021, the entire team returned. McAleenan confessed to Zhong: “I am actually IRS-CI agent Trevor McAleenan. We have a federal search warrant to search your house.” Zhong’s expression was initially blank, as if he had been “pranked.”

The subsequent search revealed astonishing secrets. Law enforcement found a computer in a popcorn tin in the upstairs closet containing millions of dollars worth of Bitcoin. Trained sniffer dogs detected a safe buried beneath the concrete floor of the basement, filled with precious metals, stacks of cash, and physical bitcoins. Most notably, they uncovered Bitcoin wallets linked to the 2012 Silk Road hack.

The Trial and the Final Revelation: A Tale from 2009

McAleenan recalled: “We could say we succeeded late at night. The house was lit, and every officer cheered.” The investigators also discovered a shocking fact—James Zhong was indeed a pivotal figure in Bitcoin history.

As early as 2009, the year Bitcoin was born, Zhong was among the core developers. Although his contributions were relatively limited compared to later famous OGs, he did contribute to the original Bitcoin code. A developer involved in creating this revolutionary technology, he ultimately became one of its biggest thieves—an ultimate irony in Bitcoin history.

After pleading guilty, James Zhong was sentenced to one year and one day in prison. Now 33, he began serving his sentence on July 14, 2023, at the Federal Prison in Montgomery, Alabama. In court, he told the judge that possessing billions of stolen bitcoins made him feel important.

The U.S. government ultimately confiscated all assets. Under the forfeiture process, victims could apply to recover the stolen bitcoins. However, most Silk Road users in 2012 were drug dealers and their customers, and no one came forward to claim the loot. The federal government liquidated these bitcoins, earning over $3 billion in proceeds. Some of the profits were shared with the Athens-Clarke County Police Department to recognize their contribution.

Technology writer Nathaniel Popper noted in his book “Digital Gold” that James Zhong’s story perfectly encapsulates the essence of Bitcoin culture—“a gathering of eccentric, unconventional people.” A Bitcoin enthusiast stealing from another Bitcoin enthusiast—what better illustration of this technology’s ultimate paradox—free, decentralized, yet filled with chaos and risk.