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HACKER STOLE 3.4 BILLION DOLLARS.
How do you picture a billionaire hacker who robbed a major darknet shop of over 50,000 bitcoins, now valued at $3 billion? You probably picture a cool guy in your head, self-confident, dangerous, and of course popular with the girls. This person must be a very talented programmer, living large and constantly throwing lavish parties, right?
But what if I told you that only the last three points fit the description of our hero? What if I painted you a completely different portrait: an unattractive guy, overweight, gullible and naive, with only one truly close friend - a dog named Chad? Yes, the hero of today's video, the famous hacker Jimmy Zhong, stands out from the other personalities we discuss on this channel. But believe me, his story is no less fascinating. If you want to know how a poor and downtrodden college student became a billionaire with 50 thousand illegally earned bitcoins, then meet Jimmy Zhong, on the other side of the law.
On a cloudy November morning in 2021, a group of uniformed men surrounded a lake house in Gainesville, Georgia. These men were officers of the IRS Criminal Investigation Division, and the house belonged to 30-year-old billionaire Jimmy Zhong. For a year, police had been coming to his mansion looking for a thief who had stolen $400 thousand in cash from Jimmy. Zhong happily chatted with them, joked and shared details of his life, unaware that all this time the police were targeting him, not the man who robbed him.
As one of the first people to seriously engage in cryptocurrency, Jimmy had made a fortune in bitcoin, but he also had one case under his belt that he hoped to keep secret for the rest of his days. Unbeknownst to Zhong, he had single-handedly led the IRS and the police to his own discovery.
The day his home was raided was a turning point in his life. How do you picture a billionaire hacker who robbed a major Dark Night Shop of over 50,000 bitcoins, now valued at $3 billion? You probably have an image of this cool guy in your head, self-confident, dangerous, and of course popular with the girls.
He must be a very talented programmer, living large and constantly throwing lavish parties, right? But what if I told you that only the last three points fit our hero’s description? What if I painted you a completely different picture? An unattractive guy, overweight, gullible and naive, with only one truly close friend - a dog named Chat?
Yes, the hero of today's video, the famous hacker Jimmy Zhong, stands out from the rest of the personalities we discuss on this channel. But believe me, his story is no less fascinating. If you want to know how a poor and downtrodden student turned into a billionaire with 50 thousand illegally earned bitcoins, then meet Jimmy Zhong on the other side of the law.
Jimmy Zhong was born on May 24, 1990 in Shanghai, but grew up in Cope County, Georgia. His parents had to endure all the hardships of first-generation immigrants. Jimmy's mother got a job as a nurse on the night shift and never got enough sleep, and his father could not find a job at all and spent his days buying cheap things and trying to resell them. The Zhong family was barely making ends meet. It is easy to guess that in such circumstances, Jimmy's parents did not spoil him with attention.
School friends could have fixed the situation, but Zhong was out of luck here too. Jimmy was an Asian, nerdy, and introverted kid who stood out from his peers and didn't fit in. His classmates bullied him, calling him fat and ugly, and regularly did him dirty. The most traumatic incident for Zhong was when his pants were pulled down in the middle of a football game. Jimmy definitely needed support from his parents, but they weren't paying attention to him.
When Zhong was in school, his parents divorced, and he began to receive even less attention. Like many children in a similar situation, Jimmy chose to escape the hostile and chaotic world into the computer world. After school, he would go to the only place where he felt safe - his room - and turn on his ancient computer. Zhong was a funny kid, good at science, and by middle school he had mastered several programming languages.
Jimmy graduated with honors and won the prestigious Hope Scholarship, which allowed him to earn a college degree on state money. Zhong hoped that the news that he had been accepted to the University of Georgia to study computer science would impress his parents, but they didn’t care. Disappointed, 18-year-old Jimmy was left to pack his bags and head to campus to start a new life.
And he did. In 2009, while still a freshman, Jimmy discovered two new sources of pleasure: alcohol and girls. Both were consumed in large quantities at parties, but there was a catch. Partying required money, and Zhong wasn’t very good at it. So Jimmy began to think about where he could earn some extra money. While browsing a programming forum shortly after the Christmas break, Jimmy learned about the world’s first cryptocurrency, Bitcoin.
Using his programming skills, Jimmy was one of the first to start mining bitcoins on his laptop. He was earning several hundred a day, but at that time the value of bitcoins was negligible, so Jimmy soon gave up on this idea and forgot about bitcoins for two years. But in 2011, he suddenly found out that the value of one coin had jumped to 30 dollars and remembered his savings.
Zhong was already anticipating how the fun of two years ago would bring him a lot of money, but he was in for a bummer. The bitcoins had disappeared somewhere. Jimmy did not remember where he saved them and could not find them. Having come to terms with this failure, he, however, did not give up, but decided to return to the bitcoin community and not give up what he had started. At 21, Zhong created a bitcoin talk account under the pseudonym Mercedes-Benz 300SD, which was a reference to the car of his dreams. Jimmy started mining and began studying transactions, sharing his findings and observations on his profile.
In his very first post, Zhong talked about the process of mixing bitcoin, the advantage of which was that it made it difficult to detect digital traces. The fact is that at that time, the prevailing opinion was that bitcoin was a kind of criminal currency that was untraceable. But people who knew the subject knew that bitcoin was actually technologically traceable to an even greater extent than any other form of currency.
If you had one bitcoin in your wallet, and you transferred this bitcoin to the wallet of a hypothetical John, then anyone in the world could find out about it by tracing the chain of transactions from your wallet to John's wallet. To confuse the tracks during transactions, you could use the services of a bitcoin mixer. If you run coins through this service, they are mixed with the bitcoins of other users, after which they will be withdrawn to a completely new wallet with no transaction history.
This way, you can take your bitcoins out without leaving any traces that other users can use to track you down. This was a solution for those who had earned their bitcoins illegally, which would become very important for Jimmy in the future. But for now, he was just learning about it out of curiosity. In addition to mining, Jimmy had also become seriously interested in gambling with cryptocurrencies.
He was a big fan of the Bitcoin Ponds website and the bitcoin gambling game, and after it closed, he decided to launch his own version of the game, earning some income from it. In addition, he was able to recover most of the bitcoins he had earned in 2009, although about 5,000 coins were lost forever due to a failed hard drive. From 11 to 17, Zhong gradually built up his financial capital.
In 2014, while studying in his last year of bachelor's degree, Jimmy earned as much as 30 million dollars by selling bitcoins for 500 dollars per coin. At some point, this guy even reached the billion dollar mark, and then Zhong was able to fulfill his long-standing dreams and desires. Having sold several bitcoins for dollars, he bought that very Mercedes-Benz and a small house in Athens, Georgia, and began throwing lavish parties with lots of alcohol and drugs.
Zhong was proud of his wealth and tried to use it to win the favor of those he wanted to see as his friends, and he even succeeded. Jimmy took his friends on trips, gave generous gifts, including bitcoins, and treated them to drinks. According to his girlfriend, there were several times when Zhong paid for alcohol for everyone at the bar, even if it meant paying a hundred for each person.
In 2018, Jimmy gathered his friends at a party, rented a private jet, and flew the whole gang to Los Angeles. And that was not all. Zhong gave each friend about $10,000 to buy clothes, jewelry, and other things. I think at that moment, everyone wanted a friend like Jimmy. Zhong's addiction to drugs has already been mentioned. I think it is necessary to say a few words about where he got them, especially since this Darknet Marketplace played a key role in the story of our hero.
We are talking about the Silk Road website. This marketplace was founded by Ross Ulbricht, who is also known by his nickname "Dread Pirate Roberts." This anonymous marketplace existed to facilitate the purchase of drugs using Bitcoin as the main currency. One day in 2012, Jimmy wanted to withdraw the bitcoins left over from several transactions from the site, but accidentally clicked the withdraw button not once, but twice.
Imagine his surprise when both operations were successful and he ended up with twice as many coins as he should have. He had discovered a bug in the Silk Road code and was now going to test how serious it was. Jimmy created a new account on the site and deposited 500 bitcoins on September 19, 2012. He then made several withdrawals, bringing his account to 2,000 bitcoins.
Repeating the process a little later, Jimmy received another thousand. In total, the bitcoins earned this way were valued at about 30 thousand dollars. Excited, Zhong created nine additional accounts, filled them with bitcoins and began withdrawing money. Of course, the bitcoins on the site did not appear out of thin air; they had to come from somewhere. Users deposited coins on the site, where they were mixed with other deposits to ensure the anonymity of the owners.
This process was supposed to make it harder to track transactions, but Jim found that it didn’t work in practice. On September 21, he posted a new post on the Bitcoin Talk forum, concluding that the mixing service did nothing to hide the fact that he was using the Silk Road site. In addition, after conducting research on the blockchain, Zhong hypothesized that the site was mixing up to 50,000 bitcoins almost every day.
Jim decided to test his hypothesis and began monitoring the blockchain to claim the coins as soon as the site moved them to the withdrawal pool. On September 24, using all of his accounts, Jimmy did just that and made over 140 transactions. In total, he received about 50,000 bitcoins, which was one-twelfth of the revenue the Silk Road earned from sales commissions.
A few days later, the owner of the Silk Road, the dread pirate Robert, contacted Jimmy. He found out where his bitcoins had disappeared to, but surprisingly, he didn’t demand the stolen coins back or threaten him. Instead, he offered the hacker a deal: he would send Jim more bitcoins, but in exchange, Zhong would explain how he had managed to steal the bitcoins from the site and how to fix the problem.
Now that the site owner knew about the problem, it was hard for Jimmy to refuse the offer, because that would force Ulbricht to contact another hacker, and Jimmy agreed to help. With his help, Ulbricht rewrote the Silk code in such a way that Zhong’s scam could no longer be repeated. The bitcoins stolen from Marketplace were valued at almost a million dollars, but Jimmy did nothing with his newfound wealth. He simply put 40,000 coins in one wallet and 10,000 in another. For some reason, Zhong didn’t think it was safe to use these bitcoins right away.
But Jimmy needed admiration and recognition of his importance, so in November 2012, a couple of months after the theft, Zhong created another account on the Bitcoin Talk forum under the nickname Loaded. Without hesitation, he described himself in his profile as a Bitcoin multimillionaire, broker, and asset manager. This account became something of a realization of his ideal self.
Here, Jamie published posts in which he made up stories about his achievements. In one post, he talked about how he attracted a new major client and now owns 200 thousand bitcoins, in another he claimed that he personally influenced the recent changes in the market after selling his clients' assets. Several times, Zhong posted while drunk, after which he started a correspondence with himself from the second account under the posts, fueling the interest of other users.
Jimmy even made up stories about flying to China on a private jet to close yet another lucrative deal. But despite all the ostentation, Zhong was smart enough to keep the true origins of his wealth under wraps. Which was a good thing, because in October 2013, the FBI shut down the Silk Road website. Its founders had 170,000 bitcoins confiscated, but that was only a small portion of his earnings.
And the authorities, realizing this, were scrambling to find the remaining coins. Now Jimmy couldn’t sell the stolen bitcoins on an exchange without leaving a trail for the feds to track him down. Zhong was forced to figure out how to cash out his money safely. We’ll get back to the stolen bitcoins later, but for now, let’s fast-forward three years to 2016. It was an eventful time in Zhong’s life. First of all, he was arrested for the first time when he bragged about having a lot of cocaine at home while sitting in a restaurant with his girlfriends.
The guy was just unlucky that there was a police officer with a keen ear at the next table. Jimmy received a suspended sentence of one year, and later the charges were dropped altogether. It was previously mentioned that Jimmy bought a house in Athens by selling the coins for dollars. It may seem strange to some that selling bitcoins to buy a house for cash did not attract the attention of the tax authorities. But the thing is that Zhong always paid taxes on the sale of bitcoins and did not cheat.
In addition, he only used legally earned coins. The 50 thousand that Jimmy stole from the Silk Road website remained untouched. The second interesting event of 2016 was the unrest in the world of cryptocurrencies. During the year, bitcoin gained popularity and reached the price of 1 thousand dollars per coin. Then the difficulties began. The Bitcoin protocol was only able to process a limited number of transactions per second, and the increased load was causing it to slow down.
This led to a conversation in the Bitcoin community in 2017 about how to increase the network’s throughput. As a result of the heated discussions, a new cryptocurrency called Bitcoin Cash was born, which increased the block size. To ease the transition, all Bitcoin holders received an equivalent amount in Bitcoin Cash. With the emergence of this currency, the community was divided into two camps. Those who continued to support Bitcoin and looked with distrust at the innovation, and those who considered Bitcoin a relic of the past and saw the future in its successor, Bitcoin Cash.
Jimmy considered himself to be more in the first group, although he hoped to hold on to both his Bitcoin and 50 thousand coins in the new currency. A few months before the release of the new cryptocurrency, Jimmy published a Loaded Post on his account, which brought him unexpected popularity. On March 21, 2017, he approached Roger Ver, an investor in many Bitcoin companies and a strong supporter of Bitcoin Cash, proposing a speculative deal for $60 million.
The prank proposal generated a lot of interest and turned Jimmy into a hero for Bitcoin supporters. Other users began to say that Roger simply had to agree to the deal, because refusing would mean that he was not as confident in the success of the new cryptocurrency as he claimed.
The news even began to be discussed on Reddit. In general, as they say, the prank got out of hand. To the surprise of other users and Jimmy's horror, Roger agreed, but asked for 48 hours to think about the deal. When that time was up, Jimmy posted a message where he claimed that he was never given a contract. We do not know how true this was, but no messages were published from this account after that.
Over the next months, Roger repeatedly posted that he tried to contact Louadot, but all was unsuccessful. Jimmy did not even post anything from his other account, apparently Roger's determination shocked him so much that he began to doubt the failure of Bitcoin Cash. Well, then Jimmy was left kicking himself. On August 1, 2017, the new cryptocurrency hard forked, and Bitcoin Cash ended up being less successful than good old Bitcoin.
Bitcoin was worth $20,000, while Bitcoin Cash was worth only $3,500. All in all, by refusing to take the deal, Zhong missed out on a whopping $973 million. Roger must have been beside himself, and it was lucky that things worked out that way. Jimmy, however, was still having a blast. Shortly after the hard fork, he transferred his Bitcoin Cash to an overseas exchange and sold it, after which he bought three and a half thousand Bitcoins.
Jimmy bought several Lamborghinis, a boat, jet skis, a motorcycle, and spent hundreds of thousands on yachts, private jets, and five-star hotel rooms. At one point, he cashed out $700,000 to fill a suitcase like the tough guys in the movies. Zhong wanted to impress the girl with this suitcase so that she would want to have sex with him, but the plan ultimately failed. Considering Jimmy's wealth and generosity, it may seem surprising, but in all this time he only slept with one girl.
And not because she wanted it, but because he paid her to do so. I want to tell you that I have a second channel. On it, I will talk about popular culture through the prism of personality and phenomena. There have already been videos about Britney Spears and Scarlett Johansson, and videos about Eminem and Tarantino are coming soon. In these works, I try to move away from the usual retelling of facts from Wikipedia for this format.
No, those facts are certainly there, but I'm trying to dive a little deeper and use all the available sources for this, from books to interviews and documentaries. My goal on this channel is to give you a comprehensive analysis of a person or phenomenon and how they influenced popular culture. So, if you are interested in this topic or me personally as an author, then the link is in the description for you.
If not, then forget everything that was said earlier and continue watching on the other side of the law. Let's move to 2019. At this time, Zhong met Clayton Kemker, who was engaged in real estate development. He and Jimmy decided to team up to create a company. Zhong's task, of course, was to finance it. Everything was going pretty well, but after investing several million in the project, Jimmy once again attracted a lot of attention to his figure.
By that time, he probably already had a few ill-wishers, but Zhong, who always longed for friendly warmth, was too trusting and naive to identify the potential danger. That's why the events that we will talk about later happened to him. At the end of March 2019, the police received a call from Jimmy. He said that, having returned home after a long absence, he found a broken window in the bedroom.
An unknown robber took the already known briefcase with money, which at that time contained about 400 thousand dollars in cash and a flash drive with personal information. Perhaps, some bitcoins were also stored there. Investigators reviewed the footage from home surveillance cameras and established that the thief was a thin man who moved as if he knew where the camera was and tried to avoid it.
Apparently, this man was quite close to Jimmy and knew about his hiding places, since he found a suitcase hidden behind an air vent. The robber was never caught, but the amount of money stolen raised the suspicions of the IRS. The police began to find out the origin of this money. Of course, at that time there were no suspicions about Zhong's connection with the Silk Road. A year-long investigation began, during which the police visited Jimmy's house under the pretext of looking for clues to catch the robber.
Filming the process on video cameras, they examined the house and tapped the floors and walls, trying to find Zhong's hiding places. Jimmy, however, did not suspect anything and did not try to somehow hide his wealth. Soon after the robbery, he bought a new house in the town of Gainesville, an hour's drive from his old home. During the police visits, Jimmy showed them around the rooms, enjoying their admiring reviews. He showed them the security and video surveillance systems, some tynyaki, mini-bars, a procession for girls who came to the house.
He even logged into his Bitcoin wallet and showed the guests over $18 million in the account. The poor guy fell for the investigator's goodwill Apparently, despite frequent parties with a large group of friends, Zhong still felt lonely in his soul and craved other people's attention. At the beginning of the investigation, the IRS contacted Jimmy's Internet provider and asked for data on his web activity and the IP addresses associated with it.
For those who don't know, an IP is a number assigned to each network user. Thanks to this number, you can track a user's actions on the Internet, for example, find out which sites he visited. Jimmy's web activity history was recorded in the Provider log, and in it the IRS found a visit to a certain cryptocurrency exchange for exchanging bitcoins, where Jimmy registered in March 2017. Knowing Zhong's IP address, the IRS received all the details of his cryptocurrency transactions.
Jimmy, who somehow hadn’t thought to use a VPN to hide his real address from the exchange, was now in danger. We’ve already noted that Zhong was very careful with his transactions, not mixing legitimately acquired bitcoins with those stolen from Silk Road. But in his position, it only took the slightest mistake to lose, and in November 2020, a year after going to the police, Jimmy made a mistake.
On November 24, he split one of the wallets with Silk Road money into smaller amounts, so that he had 10 new wallets with 1,000 bitcoins each. Jimmy was most likely preparing these coins for sale, because he needed to invest another $32 million in his real estate development company. Three weeks later, he decided to split one of the wallets again, so that three others appeared in its place. One held 500 bitcoins and the other 250. Then Zhong made a terrible mistake, accidentally using a wallet with a small balance in the transaction that he had used to transact legitimately acquired coins.
That is, he did something he had been trying to avoid for eight years - linking the bitcoins registered on the exchange under his real name and address with the coins he had acquired from Silk Road. This small area allowed Trevor McCallennan, a cybercrime investigator, to get to Jimmy's final transactions in 2021 and find out that one of the transactions involved an address that had been flagged in the tracking system back in 2013, when the Silk Road website was shut down.
This discovery was a big surprise, giving the case a more serious character. Suspicions arose that Jimmy Zhong was involved in drug trafficking and was even an unknown co-founder of Silk Road. On a cloudy November morning in 2021, IRS Criminal Investigation officers surrounded Jimmy's house, a luxurious lakefront mansion in Gainesville, Georgia, where Zhong had moved after the robbery.
The house was searched and $700,000 in cash, 25 Cassius coins worth 174 bitcoins, and most interestingly, a Cheetah popcorn tin containing a single-board computer containing all of Jimmy's bitcoins.
There were 50,676 of them, which was valued at $3.4 billion at the time. Although Zhong was arrested and his property confiscated, the bitcoins remained completely safe because they were encrypted and accessible only with the key Jimmy stored in his memory. Over the next six months, authorities actively tried to gain access to these 50,000 bitcoins, which they eventually succeeded in doing, and before Zhong, he was held in custody while the case against him was being conducted.
In part, this was a continuation of the case against Silk Road owner Ross Ulbricht, who was sentenced to double life in prison without parole in 2015 on drug trafficking, hacking, and conspiracy to launder money charges. And the court ruled that all of the millions of bitcoins that had passed through Silk Road were subject to forfeiture for Ulbricht’s crime, regardless of whether the owner kept them.
So Jimmy had to return the 51,680 bitcoins he stole from Silk Road. Over the past nine years, Zhong had spent only 1% of that amount on his real estate company. But because the government didn’t get the full amount, Jimmy had to fork over another $42 million.
In the end, Zhong lost not only his bitcoins, but also 80% of his stake in the real estate company. In the courtroom, Jimmy cried and expressed remorse for what he had done. He said he always knew what he had done was wrong, but bitcoin made him feel valuable. Jimmy also begged not to go to jail so he could take care of his closest friend, his 13-year-old sick dog Chaddie.
The Southern District of New York sentenced Jimmy Zhong to one year and one day in prison for wire fraud. Jimmy was transported to the federal prison in Montgomery, Alabama. Jimmy’s friends sent him letters of support and, for those wondering, Chaddie stayed with his owner during his incarceration, although it is not known exactly where the dog was kept.
And since the sentencing was in April 23, Jimmy Zhong is now a free man, but not nearly as rich as he once was. Details about his life are currently unknown. And since the sentence was passed in April 23, Jimmy Zhong is now a free man, but not as rich as before. The details of his life are currently unknown.
How do you picture a billionaire hacker who robbed a major darknet shop of over 50,000 bitcoins, now valued at $3 billion? You probably picture a cool guy in your head, self-confident, dangerous, and of course popular with the girls. This person must be a very talented programmer, living large and constantly throwing lavish parties, right?
But what if I told you that only the last three points fit the description of our hero? What if I painted you a completely different portrait: an unattractive guy, overweight, gullible and naive, with only one truly close friend - a dog named Chad? Yes, the hero of today's video, the famous hacker Jimmy Zhong, stands out from the other personalities we discuss on this channel. But believe me, his story is no less fascinating. If you want to know how a poor and downtrodden college student became a billionaire with 50 thousand illegally earned bitcoins, then meet Jimmy Zhong, on the other side of the law.
On a cloudy November morning in 2021, a group of uniformed men surrounded a lake house in Gainesville, Georgia. These men were officers of the IRS Criminal Investigation Division, and the house belonged to 30-year-old billionaire Jimmy Zhong. For a year, police had been coming to his mansion looking for a thief who had stolen $400 thousand in cash from Jimmy. Zhong happily chatted with them, joked and shared details of his life, unaware that all this time the police were targeting him, not the man who robbed him.
As one of the first people to seriously engage in cryptocurrency, Jimmy had made a fortune in bitcoin, but he also had one case under his belt that he hoped to keep secret for the rest of his days. Unbeknownst to Zhong, he had single-handedly led the IRS and the police to his own discovery.
The day his home was raided was a turning point in his life. How do you picture a billionaire hacker who robbed a major Dark Night Shop of over 50,000 bitcoins, now valued at $3 billion? You probably have an image of this cool guy in your head, self-confident, dangerous, and of course popular with the girls.
He must be a very talented programmer, living large and constantly throwing lavish parties, right? But what if I told you that only the last three points fit our hero’s description? What if I painted you a completely different picture? An unattractive guy, overweight, gullible and naive, with only one truly close friend - a dog named Chat?
Yes, the hero of today's video, the famous hacker Jimmy Zhong, stands out from the rest of the personalities we discuss on this channel. But believe me, his story is no less fascinating. If you want to know how a poor and downtrodden student turned into a billionaire with 50 thousand illegally earned bitcoins, then meet Jimmy Zhong on the other side of the law.
Jimmy Zhong was born on May 24, 1990 in Shanghai, but grew up in Cope County, Georgia. His parents had to endure all the hardships of first-generation immigrants. Jimmy's mother got a job as a nurse on the night shift and never got enough sleep, and his father could not find a job at all and spent his days buying cheap things and trying to resell them. The Zhong family was barely making ends meet. It is easy to guess that in such circumstances, Jimmy's parents did not spoil him with attention.
School friends could have fixed the situation, but Zhong was out of luck here too. Jimmy was an Asian, nerdy, and introverted kid who stood out from his peers and didn't fit in. His classmates bullied him, calling him fat and ugly, and regularly did him dirty. The most traumatic incident for Zhong was when his pants were pulled down in the middle of a football game. Jimmy definitely needed support from his parents, but they weren't paying attention to him.
When Zhong was in school, his parents divorced, and he began to receive even less attention. Like many children in a similar situation, Jimmy chose to escape the hostile and chaotic world into the computer world. After school, he would go to the only place where he felt safe - his room - and turn on his ancient computer. Zhong was a funny kid, good at science, and by middle school he had mastered several programming languages.
Jimmy graduated with honors and won the prestigious Hope Scholarship, which allowed him to earn a college degree on state money. Zhong hoped that the news that he had been accepted to the University of Georgia to study computer science would impress his parents, but they didn’t care. Disappointed, 18-year-old Jimmy was left to pack his bags and head to campus to start a new life.
And he did. In 2009, while still a freshman, Jimmy discovered two new sources of pleasure: alcohol and girls. Both were consumed in large quantities at parties, but there was a catch. Partying required money, and Zhong wasn’t very good at it. So Jimmy began to think about where he could earn some extra money. While browsing a programming forum shortly after the Christmas break, Jimmy learned about the world’s first cryptocurrency, Bitcoin.
Using his programming skills, Jimmy was one of the first to start mining bitcoins on his laptop. He was earning several hundred a day, but at that time the value of bitcoins was negligible, so Jimmy soon gave up on this idea and forgot about bitcoins for two years. But in 2011, he suddenly found out that the value of one coin had jumped to 30 dollars and remembered his savings.
Zhong was already anticipating how the fun of two years ago would bring him a lot of money, but he was in for a bummer. The bitcoins had disappeared somewhere. Jimmy did not remember where he saved them and could not find them. Having come to terms with this failure, he, however, did not give up, but decided to return to the bitcoin community and not give up what he had started. At 21, Zhong created a bitcoin talk account under the pseudonym Mercedes-Benz 300SD, which was a reference to the car of his dreams. Jimmy started mining and began studying transactions, sharing his findings and observations on his profile.
In his very first post, Zhong talked about the process of mixing bitcoin, the advantage of which was that it made it difficult to detect digital traces. The fact is that at that time, the prevailing opinion was that bitcoin was a kind of criminal currency that was untraceable. But people who knew the subject knew that bitcoin was actually technologically traceable to an even greater extent than any other form of currency.
If you had one bitcoin in your wallet, and you transferred this bitcoin to the wallet of a hypothetical John, then anyone in the world could find out about it by tracing the chain of transactions from your wallet to John's wallet. To confuse the tracks during transactions, you could use the services of a bitcoin mixer. If you run coins through this service, they are mixed with the bitcoins of other users, after which they will be withdrawn to a completely new wallet with no transaction history.
This way, you can take your bitcoins out without leaving any traces that other users can use to track you down. This was a solution for those who had earned their bitcoins illegally, which would become very important for Jimmy in the future. But for now, he was just learning about it out of curiosity. In addition to mining, Jimmy had also become seriously interested in gambling with cryptocurrencies.
He was a big fan of the Bitcoin Ponds website and the bitcoin gambling game, and after it closed, he decided to launch his own version of the game, earning some income from it. In addition, he was able to recover most of the bitcoins he had earned in 2009, although about 5,000 coins were lost forever due to a failed hard drive. From 11 to 17, Zhong gradually built up his financial capital.
In 2014, while studying in his last year of bachelor's degree, Jimmy earned as much as 30 million dollars by selling bitcoins for 500 dollars per coin. At some point, this guy even reached the billion dollar mark, and then Zhong was able to fulfill his long-standing dreams and desires. Having sold several bitcoins for dollars, he bought that very Mercedes-Benz and a small house in Athens, Georgia, and began throwing lavish parties with lots of alcohol and drugs.
Zhong was proud of his wealth and tried to use it to win the favor of those he wanted to see as his friends, and he even succeeded. Jimmy took his friends on trips, gave generous gifts, including bitcoins, and treated them to drinks. According to his girlfriend, there were several times when Zhong paid for alcohol for everyone at the bar, even if it meant paying a hundred for each person.
In 2018, Jimmy gathered his friends at a party, rented a private jet, and flew the whole gang to Los Angeles. And that was not all. Zhong gave each friend about $10,000 to buy clothes, jewelry, and other things. I think at that moment, everyone wanted a friend like Jimmy. Zhong's addiction to drugs has already been mentioned. I think it is necessary to say a few words about where he got them, especially since this Darknet Marketplace played a key role in the story of our hero.
We are talking about the Silk Road website. This marketplace was founded by Ross Ulbricht, who is also known by his nickname "Dread Pirate Roberts." This anonymous marketplace existed to facilitate the purchase of drugs using Bitcoin as the main currency. One day in 2012, Jimmy wanted to withdraw the bitcoins left over from several transactions from the site, but accidentally clicked the withdraw button not once, but twice.
Imagine his surprise when both operations were successful and he ended up with twice as many coins as he should have. He had discovered a bug in the Silk Road code and was now going to test how serious it was. Jimmy created a new account on the site and deposited 500 bitcoins on September 19, 2012. He then made several withdrawals, bringing his account to 2,000 bitcoins.
Repeating the process a little later, Jimmy received another thousand. In total, the bitcoins earned this way were valued at about 30 thousand dollars. Excited, Zhong created nine additional accounts, filled them with bitcoins and began withdrawing money. Of course, the bitcoins on the site did not appear out of thin air; they had to come from somewhere. Users deposited coins on the site, where they were mixed with other deposits to ensure the anonymity of the owners.
This process was supposed to make it harder to track transactions, but Jim found that it didn’t work in practice. On September 21, he posted a new post on the Bitcoin Talk forum, concluding that the mixing service did nothing to hide the fact that he was using the Silk Road site. In addition, after conducting research on the blockchain, Zhong hypothesized that the site was mixing up to 50,000 bitcoins almost every day.
Jim decided to test his hypothesis and began monitoring the blockchain to claim the coins as soon as the site moved them to the withdrawal pool. On September 24, using all of his accounts, Jimmy did just that and made over 140 transactions. In total, he received about 50,000 bitcoins, which was one-twelfth of the revenue the Silk Road earned from sales commissions.
A few days later, the owner of the Silk Road, the dread pirate Robert, contacted Jimmy. He found out where his bitcoins had disappeared to, but surprisingly, he didn’t demand the stolen coins back or threaten him. Instead, he offered the hacker a deal: he would send Jim more bitcoins, but in exchange, Zhong would explain how he had managed to steal the bitcoins from the site and how to fix the problem.
Now that the site owner knew about the problem, it was hard for Jimmy to refuse the offer, because that would force Ulbricht to contact another hacker, and Jimmy agreed to help. With his help, Ulbricht rewrote the Silk code in such a way that Zhong’s scam could no longer be repeated. The bitcoins stolen from Marketplace were valued at almost a million dollars, but Jimmy did nothing with his newfound wealth. He simply put 40,000 coins in one wallet and 10,000 in another. For some reason, Zhong didn’t think it was safe to use these bitcoins right away.
But Jimmy needed admiration and recognition of his importance, so in November 2012, a couple of months after the theft, Zhong created another account on the Bitcoin Talk forum under the nickname Loaded. Without hesitation, he described himself in his profile as a Bitcoin multimillionaire, broker, and asset manager. This account became something of a realization of his ideal self.
Here, Jamie published posts in which he made up stories about his achievements. In one post, he talked about how he attracted a new major client and now owns 200 thousand bitcoins, in another he claimed that he personally influenced the recent changes in the market after selling his clients' assets. Several times, Zhong posted while drunk, after which he started a correspondence with himself from the second account under the posts, fueling the interest of other users.
Jimmy even made up stories about flying to China on a private jet to close yet another lucrative deal. But despite all the ostentation, Zhong was smart enough to keep the true origins of his wealth under wraps. Which was a good thing, because in October 2013, the FBI shut down the Silk Road website. Its founders had 170,000 bitcoins confiscated, but that was only a small portion of his earnings.
And the authorities, realizing this, were scrambling to find the remaining coins. Now Jimmy couldn’t sell the stolen bitcoins on an exchange without leaving a trail for the feds to track him down. Zhong was forced to figure out how to cash out his money safely. We’ll get back to the stolen bitcoins later, but for now, let’s fast-forward three years to 2016. It was an eventful time in Zhong’s life. First of all, he was arrested for the first time when he bragged about having a lot of cocaine at home while sitting in a restaurant with his girlfriends.
The guy was just unlucky that there was a police officer with a keen ear at the next table. Jimmy received a suspended sentence of one year, and later the charges were dropped altogether. It was previously mentioned that Jimmy bought a house in Athens by selling the coins for dollars. It may seem strange to some that selling bitcoins to buy a house for cash did not attract the attention of the tax authorities. But the thing is that Zhong always paid taxes on the sale of bitcoins and did not cheat.
In addition, he only used legally earned coins. The 50 thousand that Jimmy stole from the Silk Road website remained untouched. The second interesting event of 2016 was the unrest in the world of cryptocurrencies. During the year, bitcoin gained popularity and reached the price of 1 thousand dollars per coin. Then the difficulties began. The Bitcoin protocol was only able to process a limited number of transactions per second, and the increased load was causing it to slow down.
This led to a conversation in the Bitcoin community in 2017 about how to increase the network’s throughput. As a result of the heated discussions, a new cryptocurrency called Bitcoin Cash was born, which increased the block size. To ease the transition, all Bitcoin holders received an equivalent amount in Bitcoin Cash. With the emergence of this currency, the community was divided into two camps. Those who continued to support Bitcoin and looked with distrust at the innovation, and those who considered Bitcoin a relic of the past and saw the future in its successor, Bitcoin Cash.
Jimmy considered himself to be more in the first group, although he hoped to hold on to both his Bitcoin and 50 thousand coins in the new currency. A few months before the release of the new cryptocurrency, Jimmy published a Loaded Post on his account, which brought him unexpected popularity. On March 21, 2017, he approached Roger Ver, an investor in many Bitcoin companies and a strong supporter of Bitcoin Cash, proposing a speculative deal for $60 million.
The prank proposal generated a lot of interest and turned Jimmy into a hero for Bitcoin supporters. Other users began to say that Roger simply had to agree to the deal, because refusing would mean that he was not as confident in the success of the new cryptocurrency as he claimed.
The news even began to be discussed on Reddit. In general, as they say, the prank got out of hand. To the surprise of other users and Jimmy's horror, Roger agreed, but asked for 48 hours to think about the deal. When that time was up, Jimmy posted a message where he claimed that he was never given a contract. We do not know how true this was, but no messages were published from this account after that.
Over the next months, Roger repeatedly posted that he tried to contact Louadot, but all was unsuccessful. Jimmy did not even post anything from his other account, apparently Roger's determination shocked him so much that he began to doubt the failure of Bitcoin Cash. Well, then Jimmy was left kicking himself. On August 1, 2017, the new cryptocurrency hard forked, and Bitcoin Cash ended up being less successful than good old Bitcoin.
Bitcoin was worth $20,000, while Bitcoin Cash was worth only $3,500. All in all, by refusing to take the deal, Zhong missed out on a whopping $973 million. Roger must have been beside himself, and it was lucky that things worked out that way. Jimmy, however, was still having a blast. Shortly after the hard fork, he transferred his Bitcoin Cash to an overseas exchange and sold it, after which he bought three and a half thousand Bitcoins.
Jimmy bought several Lamborghinis, a boat, jet skis, a motorcycle, and spent hundreds of thousands on yachts, private jets, and five-star hotel rooms. At one point, he cashed out $700,000 to fill a suitcase like the tough guys in the movies. Zhong wanted to impress the girl with this suitcase so that she would want to have sex with him, but the plan ultimately failed. Considering Jimmy's wealth and generosity, it may seem surprising, but in all this time he only slept with one girl.
And not because she wanted it, but because he paid her to do so. I want to tell you that I have a second channel. On it, I will talk about popular culture through the prism of personality and phenomena. There have already been videos about Britney Spears and Scarlett Johansson, and videos about Eminem and Tarantino are coming soon. In these works, I try to move away from the usual retelling of facts from Wikipedia for this format.
No, those facts are certainly there, but I'm trying to dive a little deeper and use all the available sources for this, from books to interviews and documentaries. My goal on this channel is to give you a comprehensive analysis of a person or phenomenon and how they influenced popular culture. So, if you are interested in this topic or me personally as an author, then the link is in the description for you.
If not, then forget everything that was said earlier and continue watching on the other side of the law. Let's move to 2019. At this time, Zhong met Clayton Kemker, who was engaged in real estate development. He and Jimmy decided to team up to create a company. Zhong's task, of course, was to finance it. Everything was going pretty well, but after investing several million in the project, Jimmy once again attracted a lot of attention to his figure.
By that time, he probably already had a few ill-wishers, but Zhong, who always longed for friendly warmth, was too trusting and naive to identify the potential danger. That's why the events that we will talk about later happened to him. At the end of March 2019, the police received a call from Jimmy. He said that, having returned home after a long absence, he found a broken window in the bedroom.
An unknown robber took the already known briefcase with money, which at that time contained about 400 thousand dollars in cash and a flash drive with personal information. Perhaps, some bitcoins were also stored there. Investigators reviewed the footage from home surveillance cameras and established that the thief was a thin man who moved as if he knew where the camera was and tried to avoid it.
Apparently, this man was quite close to Jimmy and knew about his hiding places, since he found a suitcase hidden behind an air vent. The robber was never caught, but the amount of money stolen raised the suspicions of the IRS. The police began to find out the origin of this money. Of course, at that time there were no suspicions about Zhong's connection with the Silk Road. A year-long investigation began, during which the police visited Jimmy's house under the pretext of looking for clues to catch the robber.
Filming the process on video cameras, they examined the house and tapped the floors and walls, trying to find Zhong's hiding places. Jimmy, however, did not suspect anything and did not try to somehow hide his wealth. Soon after the robbery, he bought a new house in the town of Gainesville, an hour's drive from his old home. During the police visits, Jimmy showed them around the rooms, enjoying their admiring reviews. He showed them the security and video surveillance systems, some tynyaki, mini-bars, a procession for girls who came to the house.
He even logged into his Bitcoin wallet and showed the guests over $18 million in the account. The poor guy fell for the investigator's goodwill Apparently, despite frequent parties with a large group of friends, Zhong still felt lonely in his soul and craved other people's attention. At the beginning of the investigation, the IRS contacted Jimmy's Internet provider and asked for data on his web activity and the IP addresses associated with it.
For those who don't know, an IP is a number assigned to each network user. Thanks to this number, you can track a user's actions on the Internet, for example, find out which sites he visited. Jimmy's web activity history was recorded in the Provider log, and in it the IRS found a visit to a certain cryptocurrency exchange for exchanging bitcoins, where Jimmy registered in March 2017. Knowing Zhong's IP address, the IRS received all the details of his cryptocurrency transactions.
Jimmy, who somehow hadn’t thought to use a VPN to hide his real address from the exchange, was now in danger. We’ve already noted that Zhong was very careful with his transactions, not mixing legitimately acquired bitcoins with those stolen from Silk Road. But in his position, it only took the slightest mistake to lose, and in November 2020, a year after going to the police, Jimmy made a mistake.
On November 24, he split one of the wallets with Silk Road money into smaller amounts, so that he had 10 new wallets with 1,000 bitcoins each. Jimmy was most likely preparing these coins for sale, because he needed to invest another $32 million in his real estate development company. Three weeks later, he decided to split one of the wallets again, so that three others appeared in its place. One held 500 bitcoins and the other 250. Then Zhong made a terrible mistake, accidentally using a wallet with a small balance in the transaction that he had used to transact legitimately acquired coins.
That is, he did something he had been trying to avoid for eight years - linking the bitcoins registered on the exchange under his real name and address with the coins he had acquired from Silk Road. This small area allowed Trevor McCallennan, a cybercrime investigator, to get to Jimmy's final transactions in 2021 and find out that one of the transactions involved an address that had been flagged in the tracking system back in 2013, when the Silk Road website was shut down.
This discovery was a big surprise, giving the case a more serious character. Suspicions arose that Jimmy Zhong was involved in drug trafficking and was even an unknown co-founder of Silk Road. On a cloudy November morning in 2021, IRS Criminal Investigation officers surrounded Jimmy's house, a luxurious lakefront mansion in Gainesville, Georgia, where Zhong had moved after the robbery.
The house was searched and $700,000 in cash, 25 Cassius coins worth 174 bitcoins, and most interestingly, a Cheetah popcorn tin containing a single-board computer containing all of Jimmy's bitcoins.
There were 50,676 of them, which was valued at $3.4 billion at the time. Although Zhong was arrested and his property confiscated, the bitcoins remained completely safe because they were encrypted and accessible only with the key Jimmy stored in his memory. Over the next six months, authorities actively tried to gain access to these 50,000 bitcoins, which they eventually succeeded in doing, and before Zhong, he was held in custody while the case against him was being conducted.
In part, this was a continuation of the case against Silk Road owner Ross Ulbricht, who was sentenced to double life in prison without parole in 2015 on drug trafficking, hacking, and conspiracy to launder money charges. And the court ruled that all of the millions of bitcoins that had passed through Silk Road were subject to forfeiture for Ulbricht’s crime, regardless of whether the owner kept them.
So Jimmy had to return the 51,680 bitcoins he stole from Silk Road. Over the past nine years, Zhong had spent only 1% of that amount on his real estate company. But because the government didn’t get the full amount, Jimmy had to fork over another $42 million.
In the end, Zhong lost not only his bitcoins, but also 80% of his stake in the real estate company. In the courtroom, Jimmy cried and expressed remorse for what he had done. He said he always knew what he had done was wrong, but bitcoin made him feel valuable. Jimmy also begged not to go to jail so he could take care of his closest friend, his 13-year-old sick dog Chaddie.
The Southern District of New York sentenced Jimmy Zhong to one year and one day in prison for wire fraud. Jimmy was transported to the federal prison in Montgomery, Alabama. Jimmy’s friends sent him letters of support and, for those wondering, Chaddie stayed with his owner during his incarceration, although it is not known exactly where the dog was kept.
And since the sentencing was in April 23, Jimmy Zhong is now a free man, but not nearly as rich as he once was. Details about his life are currently unknown. And since the sentence was passed in April 23, Jimmy Zhong is now a free man, but not as rich as before. The details of his life are currently unknown.
