Federal authorities are making arrests and seizing funds with the help of new tools to identify criminals through cryptocurrency transactions.
James Zhong appeared to have pulled off the perfect crime.
In December 2012, he stumbled upon a software bug while withdrawing money from his account on Silk Road, an online marketplace used to hide criminal dealings behind the seemingly bulletproof anonymity of blockchain transactions and the dark web. Mr. Zhong, a 22-year-old University of Georgia computer-science student at the time, used the site to buy cocaine.
