Apr. 14—In just a few hours across two days in 2012, a 21-year-old stole roughly 50,000 Bitcoin that is now worth billions of dollars.

Roughly nine years later, authorities searched James "Jimmy" Zhong's Gainesville lake house and found most of it in an underground floor safe and a computer stored in a popcorn tin.

Zhong, 32, pleaded guilty in November to wire fraud and was sentenced Friday, April 14 in the Southern District of New York to a year and a day in prison by U.S. District Judge Paul Gardephe.

Zhong was accused of taking roughly 50,000 Bitcoin from the site known as Silk Road, a darknet black market.

The prosecution said the investigation into Zhong led them to roughly 51,680 Bitcoin worth more than $3.4 billion when it was seized. As of March 30, it was worth $1.48 billion.

Zhong was ordered to forfeit $661,900 in U.S. currency found at his home, 25 physical coins worth 174 Bitcoin and 154 Bitcoin seized from various locations. He was also ordered to give up his 80% interest in a Memphis-based company with real estate holdings, in which Zhong had invested about $9.5 million of his proceeds.

The sentencing guideline for wire fraud ranges from 27 to 33 months in prison.

The defense was seeking a sentence of five years of probation combined with a period of home detention.

The prosecution wrote that a sentence involving prison time was necessary given the severity of Zhong's actions and his attempts to conceal his identity.

"Indeed, in the 51 months before law enforcement's overt search of Zhong's residences, Zhong dissipated approximately $16 million of crime proceeds, spending lavishly on real estate investments, luxury products, travel, hotels, nightclubs and other expenses," according to the prosecution's memo.

The prosecution detailed Zhong's "high standard of living that he maintained even with untainted proceeds," which included two homes, multiple Lamborghinis, a boat, multiple jet skis and a motorcycle "backstopped by the safety net of billions of dollars of Silk Road crime proceeds that he also possessed."

There were roughly 1.5 million transactions over Silk Road between February 2011 and October 2013 involving roughly 9.9 million Bitcoin, the vast majority of which were for drugs, according to the prosecution.

In 2019, the Internal Revenue Service and the federal government began investigating roughly 53,500 of Bitcoin connected to Silk Road and its creator, Ross Ulbricht.

Ulbricht was sentenced in 2015 to life in prison after being convicted on distributing narcotics, conspiring to commit computer hacking, conspiring to commit money laundering and other charges.

The investigation revealed Zhong exploited a weak spot in Silk Road's payment processing system, transferring at least 50,000 Bitcoin from Silk Road's addresses into his own.

Before the government searched his home, Zhong was "evasive and untruthful to a cryptocurrency exchange" about where his wealth originated from, claiming that it was trading profits or Bitcoin he had mined

"Zhong repeatedly boasted, in various public message board posts, about his state-of-the art computer setup and security measures deployed at his residences," according to the prosecution. "(The IRS)'s cyber team personally observed and confirmed the astounding technical sophistication of Zhong's home operations."

These included multiple computer servers, virtual private networks and numerous layers of encryption, the prosecution said.

Law enforcement searched Zhong's Gainesville lake house Nov. 9, 2021, and found more than 50,000 Bitcoin in devices in an underground floor safe and a computer stored in a popcorn tin.

Roughly a year after the search, Zhong waived indictment and pleaded guilty to wire fraud.

The prosecution recommended a sentence of less than two years incarceration.

Zhong's legal team — Michael Bachner, Donald Samuel, John Garland and Amanda Clark Palmer, submitted a sentencing memo ahead of Friday's sentencing.

Zhong's defense wrote that at the time of the fraud the Bitcoin was worth $620,000 and appreciated greatly.

Zhong's defense wrote that Ulbricht contacted Zhong about how he took the Bitcoin but never asked for it to be returned.

"Rather, he thanked Jimmy for his candor and sent him, unsolicited, additional Bitcoin," Zhong's defense wrote. "Silk Road's response to Jimmy's conduct is hardly the response of a victim."

Zhong's defense wrote that their client, who is autistic, was "the product of a dysfunctional family and childhood."

"From childhood until high school, Jimmy was severely bullied and victimized by his peers because he was different — he was extremely shy, overweight and most significantly, suffered from undiagnosed autism spectrum disorder," they wrote. "Having no friends or family he could turn to, Jimmy found solace and friendship in the world of his computer."

Zhong's defense wrote that Zhong never encouraged or told others how to exploit the flaw in Silk Road's payment processing. They also argued that Ulbricht "is not a 'victim' in the true sense of the word," because it was tied to Ulbricht's criminal behavior.

Friends described Zhong in letters to Judge Gardephe as an "honest and loving character" while another called him "the most loyal, caring and empathetic individual I have ever met."

"He never fails to volunteer himself to lend a hand to anyone in need, and his dedication and commitment have been appreciated by everyone," one friend wrote. "Jimmy has been a role model for young people in our community and has helped them in shaping their future."

The prosecution also noted that three of Zhong's letter writers received millions of dollars of gifts from Zhong "albeit perhaps unknowingly to them in the form of Silk Road crime proceeds."

Since his arrest, Zhong has worked as a ride-share driver and started a new business.

The government started liquidating roughly 9,860 Bitcoin for more than $215 million.