Memphis property investor pleads guilty to stealing nearly $3.4 billion in Bitcoin

MEMPHIS, Tenn. — A man with documented investments in Memphis properties pleaded guilty to stealing a “historic” amount of Bitcoin, valued at $3.4 billion, federal investigators announced on Monday.

“For almost 10 years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery,” wrote U.S. Attorney Damian Williams in a news release.

Back in 2012, investigators with the Department of Justice said that James Zhong committed wire fraud by stealing more than 50,000 Bitcoin from the “Silk Road dark web internet marketplace.” Federal investigators described it as the largest cryptocurrency seizure in the history of the department and the second largest financial seizure ever.

“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,” Williams wrote.

Connections to Memphis

According to the department, Zhong had 80% interest in RE&D Investments, described as a “Memphis-based company with substantial real estate holdings.”

“Obviously, I had no idea of his fraudulent business dealings,” Clayton Kemker, the managing partner of RE&D Investments, said by phone on Wednesday evening. “This came as a complete shock to me.”

Kemker told FOX13 that Zhong is still a member of the company, but will be removed following his sentencing in February. He said Zhong signed a forfeiture agreement, surrendering his share of the company to the federal government.

“It left me in a very bad position, trying to continue these projects,” Kemker said. “Being a local Memphian, I want to contribute to this city.”

One of those investments was a 5.5-acre planned development in the Cooper Young neighborhood, detailed in these county documents from December 2020.

RE&D Investments is also listed as the owner of a lot on 193 Pine Street, according to the Shelby County Assessor of Property.

According to the Memphis Business Journal, RE&D Investments had planned to redevelop the building into “top-end apartments.”

However, neighbors told FOX13 that they worry the developers have abandoned the construction project, which they describe as a nuisance to the neighborhood.

“It’s just a big eyesore,” said Joyce Askew, who lives next door. “It’s an embarrassment to me, even though it’s not my property.”

Askew said the property attracts trespassers who leave behind human waste and trash. She said that she is constantly removing shopping carts from the back alley behind her home.

“I’m really kind of afraid for my safety,” she said.

Kemker said that he has every intention to finish the projects, but that it might be difficult without his primary investor.

“We don’t want any of the people in the neighborhoods to feel unsafe in their own homes,” Kemker said. “We’re looking to remedy that. It’s obviously been a tough situation to deal with all the properties and all the shake-ups, but we’re trying to get on top of that.”