The stash of 50,676 Bitcoins was found hidden on various devices in a hacker’s house in an under-floor safe and in a box of popcorn.
James Zhong pleaded guilty to hacking funds from the illegal Silk Road market in 2012.
The seizure is the second largest in history, according to US authorities.
The police raid on Mr Zhong’s Georgian home took place a year ago but has only now been uncovered.
It happened at the same time that Bitcoin’s value was peaking – the seized funds were now worth around $1.1 billion. Officials said they found bitcoin at home on hard drives and other storage devices in a floor safe and on a small computer hidden in a popcorn box in a bathroom cabinet.
Police say Mr Zhong was able to steal Silk Road’s funds by exploiting a loophole in the website’s payment system.
In September 2012, he created several accounts on the dark web market and deposited a small amount of bitcoins in his digital wallets. He then found a way to quickly withdraw much larger sums so as not to arouse suspicion.
Silk Road was the first darknet market, operating from around 2011 to 2013. It has been used by drug dealers and other illegitimate sellers to distribute huge quantities of illegal drugs and other illegal goods and services to many buyers.
The darknet is a part of the Internet that can only be accessed with specialized software.
In 2015, Silk Road founder Ross Ulbricht was unanimously sentenced to life in prison by a jury.
How the police shut down the largest darknet market in the world
Online marketplace for hosting stolen data closed
Mr. Zhong pleaded guilty to hacking the website on November 4th and confiscated his Bitcoins and his assets from the police pending sentencing. He faces up to 20 years in prison.
Lawyer Damian Williams said police used cryptocurrency tracking techniques to locate bitcoin.
“For nearly 10 years, the whereabouts of this huge missing bitcoin chunk remained a $3.3 billion mystery,” he said.
“This case shows that we won’t stop following the money, even if it’s cleverly hidden, even down to a circuit board in the bottom of a popcorn box.”
At the time, it was the largest cryptocurrency seizure in US history, but was surpassed in February when over $4 billion worth of Bitcoin was stolen in the 2016 Bitfinex hack have been seized.
