thecoinrise.com
In a significant victory for the United States government’s ongoing efforts to crackdown on crypto mixers, Roman Sterlingov, the founder of Bitcoin Fog, was convicted on Tuesday, March 12, in a United States District Court.
The massive $400 million crypto-mixing service called Bitcoin Fog operated by Sterlingov was found guilty of various charges, including money laundering, money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act.
Bitcoin Fog Founder Defends His Involvement
Throughout the trial, the 35-year-old Sterlingov maintained that he was merely a user of the service, not its operator. His attorney, Tok Ekeland, announced on March 12 that they plan to appeal the verdict, emphasizing Sterlingov’s role as a user rather than the operator.
Money Laundering Service for Criminals
Bitcoin Fog operated from October 2011 to April 2021, serving as a money laundering service for criminals seeking to conceal illicit proceeds.
Evidence presented during the trial revealed that over the decade-long operation, approximately $400 million worth of cryptocurrency flowed through the platform. The majority of these funds were linked to darknet marketplaces associated with narcotics, computer fraud abuse, identity theft, and even distributors of child sexual abuse material.
The conviction was based on the evidence that the “vast majority” of crypto deposited into Sterlingov’s exchange accounts originated from “Bitcoin clusters” associated with Bitcoin Fog.
IRS Criminal Investigation Chief Jim Lee stated,
“Evidence presented at trial clearly showed that the defendant laundered hundreds of millions of illicit funds from the dark web through Bitcoin Fog in an attempt to conceal the origin of those funds.”
Bitcoin Fog Founder Sees 20 Years in Prison
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division echoed the commitment to unmask and prosecute those who use technology to hide their crimes, regardless of the sophistication of the scheme.
Despite the guilty verdict, J.W. Verret, a professional witness in the case, has pledged to support Sterlingov’s appeal, citing concerns about flawed on-chain forensics.
The jury also granted forfeiture of assets seized from Bitcoin Fog, including 1,354 BTC held in a Bitcoin Fog wallet and nearly $350,000 in various cryptocurrencies seized from a Kraken account. The most serious charges against Sterlingov carry a maximum sentence of 20 years in prison, with sentencing scheduled for July 15.
Crackdown on Crypto Mixers
In a related development, another crypto mixer founder, Roman Storm, co-founder of the controversial Tornado Cash, is set to face trial in September.
Tornado Cash was sanctioned in August 2022, and Storm faces charges of conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and conspiracy to violate the International Emergency Economic Powers Act. Storm has pleaded not guilty to all charges.