In a significant success for U.S. authorities clamping down on unlawful crypto-mixing operations, Roman Sterlingov, the 35-year-old Bitcoin Fog founder, was convicted of money laundering and related accusations in a United States District Court on Tuesday, March 12.
TLDR
- The District Court found 35-year-old Roman Sterlingov guilty of money laundering, conspiracy to launder money, operating an unauthorized money-transmitting business, and violating the D.C. Money Transmitters Act.
- Operating from October 2011 to April 2021, Bitcoin Fog facilitated over 1.2 million Bitcoin transactions (valued at $400 million at the transaction times) largely sourced from darknet markets linked to illegal operations.
- Attorney Tok Ekeland, leading Sterlingov's defense, is preparing to contest the conviction, claiming faults in the blockchain analysis that implicated Sterlingov.
- The court decreed the forfeiture of assets seized from Bitcoin Fog, which included 1,354 BTC and approximately $350,000 in various digital currencies.
- Sterlingov's downfall marks one of several recent moves against crypto-mixers and their creators, with Roman Storm, co-founder of Tornado Cash, facing trial later this year.
A U.S. jury found Sterlingov, who holds Russian and Swiss citizenship, guilty on four charges, including money laundering, conspiracy to commit money laundering, operating without a money transmission license, and breaches of the D.C. Money Transmitters Act.
Bitcoin Fog was functional from October 2011 to April 2021, serving as a laundering platform for criminals aiming to mask their proceeds from illicit activities.
Trial evidence revealed that the platform processed above 1.2 million Bitcoin, equating to around $400 million at the respective time, most of which originated from darknet markets dealing in drugs, cyber fraud, identity theft, and explicit child content.
Operator of Bitcoin Fog found guilty of conspiring to launder money. https://t.co/R4KEElyZ9T @DOJCrimDiv @IRS_CI @USAO_DC pic.twitter.com/4SJpCfUGyQ
— FBI Washington Field (@FBIWFO) March 12, 2024
Throughout the legal proceedings, Sterlingov argued his position was merely that of a user, denying operating the service.
Nonetheless, government evidence illustrated that the majority of cryptocurrency entering Sterlingov's exchange accounts stemmed from Bitcoin Fog-associated Bitcoin clusters.
Despite the ruling, Sterlingov's legal team, spearheaded by Tok Ekeland, is set on challenging the judgment.
J.W. Verret, who testified in the trial, committed to supporting the appeal, criticizing the blockchain forensics accusing Sterlingov as defective.
The court ruled for forfeiture of valuables seized from Bitcoin Fog, comprising of 1,354 BTC stored in a Bitcoin Fog wallet and close to $350,000 in cryptos held in a Kraken account.
Facing a potential 20-year prison sentence, Sterlingov's punishment for the most critical charges is scheduled for determination on July 15.
This conviction is indicative of a broader initiative by U.S. legal forces to dismantle crypto-mixing ventures and their founders.
Roman Storm, renowned for co-founding the controversial crypto mixer Tornado Cash, is slated to stand trial later this year for money laundering and managing an unauthorized money-transmitting business.
As the U.S. government intensifies its actions against illegal cryptocurrency mixing services, Sterlingov's conviction underscores the severe consequences awaiting those facilitating money laundering through such platforms.
