Roman Sterlingov is the most recent individual to fall to a United States (US) government crackdown on illegal crypto-mixing services. However, his lawyers are not taking this verdict lying down.
The founder of Bitcoin Fog, a large $400 million crypto-mixing service, was convicted of money laundering in a United States District Court on Tuesday, March 12. This conviction is considered the latest win in the US government’s crackdown on crypto mixers and their founders.
Roman Sterlingov, 35, was found guilty of money laundering, operating an unlicensed money-transmitting company, money laundering conspiracy, and violations of the D.C. Money Transmitters Act.
Nonetheless, Sterlingov had insisted in the entire trial that he was just a user of the service and not its operator. His attorney, Tok Ekeland said in a March 12 X post that he has instructed his legal team to appeal this verdict.
Based on evidence presented at this trial, Sterlingov operated Bitcoin Fog between October 2011 and April 2021, which acted as a money laundering service for “criminals seeking to hide their illicit proceeds from law enforcement.”
This service moved over 1.2 million Bitcoin (BTC) over the decade-long operation – worth more than $400 million at the time of these transactions. Notably, most of the cryptocurrency handled came from darknet marketplaces linked to computer fraud abuse, narcotics, and identity theft, as elaborated by the government. Sadly, Bitcoin Fog was also discovered to have served distributors of child sexual abuse material.
The Evidence Was Overwhelming
The evidence that was used to convict Sterlingov found that most of the crypto deposited to his crypto exchange accounts came from “Bitcoin clusters” linked to Bitcoin Fog.
According to Internal Revenue Service (IRS) Criminal Investigation Chief Jim Lee:
“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.”
Interestingly, Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division said the division is “committed to unmasking and prosecuting those who use technology to hide their crimes, no matter how sophisticated the scheme may be.”
One professional witness in this case, J.W. Verret, also pledged to assist in the process of Sterlingov’s appeal. Verret has long insisted that the on-chain forensics used to accuse Sterlingov is flawed.
Verret commented:
“The trial lasted four weeks. I testified for a full day and I worked on the case for a year. The verdict, issued March 12, was ‘guilty.’ They say it four times as the four counts of the indictment are read. It felt like I was punched in the stomach. The only way my brain can process it is to focus on strategies for appeal.”
The jury granted forfeiture of assets seized from the crypto mixer, which consists of 1,354 BTC held in a Bitcoin Fog wallet and almost $350,000 in different cryptos held in a seized Kraken account.
According to the jury, the most serious charges, which include money laundering sting and money laundering conspiracy, each attract a maximum sentence of 20 years in prison, while the other two charges attract a maximum sentence of five years in prison. On that note, sentencing is scheduled for July 15.
Another Founder Faces Trial
Another crypto mixer founder is scheduled to face trial later this year. The US government has been active in recent years in trying to tame the wanton criminal activities in the crypto sector which have resulted in investors losing lots of their money.
The co-founder of controversial cryptocurrency mixer Tornado Cash which was sanctioned in August 2022, Roman Storm, is expected to face a criminal trial in September 2024.
In that context, the Tornado Cash co-founder faces three charges – conspiracy to commit money laundering, conspiracy to violate the International Emergency Economic Powers Act, and conspiracy to operate an unlicensed money-transmitting company.
He has pleaded not guilty to all these charges.
