Bitcoin Fog Operator Declared Guilty of Money Laundering, Faces Up to 50 Years in Prison

Following his arrest nearly three years ago, a Jury in a US federal district court found Roman Sterlingov, operator of the crypto mixer Bitcoin Fog, guilty of a four-count charge regarding money laundering.

The founder of Bitcoin Fog faces up to a maximum of 50 years in prison for all his charges.

Sterlingov Convicted

According to a press release on March 12, the jury declared Roman Sterlingov guilty of money laundering conspiracy and sting money laundering. The 35-year-old Russian-Swedish Bitcoin Fog founder was also found guilty of operating an unlicensed money-transmitting venture and violations of the D.C. Money Transmitters Act.

While Sterlingov’s sentencing has been scheduled for July 15, 2024, the first two charges each carry a maximum sentence of 20 years imprisonment, while the last two charges have a maximum prison sentence of five years each.

Bitcoin Fog, which operated for a decade between 2011 and 2021, served as a money laundering tool for criminals looking to obfuscate their ill-gotten money. The crypto mixer moved over 1.2 million Bitcoin throughout its operation, which was worth close to $400 million at the time and is valued at $88 billion at BTC’s current price.

As stated in the press release, most of the Bitcoin was gotten from darknet marketplaces linked to computer fraud, illegal narcotics, and identity theft. The mixer also serviced people who supplied child sexual abuse material.

Meanwhile, Bitcoin Fog’s biggest clients, according to the government, were dark web markets such as Silk Road, AlphaBay, and Agora.

Commenting on the latest development, US Attorney of the District of Columbia, Matthew Graves, said:

“Darknet criminals should know by now that operations like Bitcoin Fog cannot provide the anonymity for cryptocurrency transactions that they claim they can. This conviction demonstrates that the United States can and will combat the use of technology to carry out crimes in cyberspace.”

Apart from the guilty verdict, the jury granted forfeiture of assets previously seized by law enforcement, which include 1,354 BTC held in a Bitcoin Fog wallet, $349,625, and other crypto assets in seized accounts on the cryptocurrency exchange Kraken.

Sterlingov’s Lawyer Seeks to Reverse Guilty Verdict

Meanwhile, Tor Ekeland, the lawyer representing Sterlingov, said that they would appeal against the jury’s guilty verdict. During Sterlingov’s trial, Ekeland argued that there was no evidence pointing to the fact that his client operated Bitcoin Fog.

Sterlingov, who was arrested in April 2021, said in his testimony said that he did not remember if he created the domain name for the crypto mixer, and was doubtful that he was behind the creation.

Guilty verdict in U.S v. Sterlingov. Now we appeal.

— Tor Ekeland (@TorEkelandPLLC) March 12, 2024

US prosecutors brought in Ilya Lichtenstein and Larry Harmon to testify in the trial. Lichtenstein previously pleaded guilty to a money laundering conspiracy charge in 2022 in connection to his hack of Bitfinex in 2016 and theft of funds. Harmon, owner of Bitcoin mixer Helix, also pleaded guilty to money laundering in 2021.

Lichtenstein, testifying in the trial, said that he used mixers such as Bitcoin Fog to obfuscate the stolen funds, but he stated that Sterlingov’s crypto mixing service was not his main tool for money laundering.

Crypto mixing services continue to come under intense scrutiny from US authorities, which believe that such services serve as a useful tool for criminals. One prominent crypto mixer, Tornado Cash, was sanctioned by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in 2022.

Tornado Cash allegedly helped to launder proceeds of cybercrimes for malicious actors such as Lazarus Group. Developers Roman Semenov and Roman Storm are facing charges ranging from money laundering to violations of sanctions, to which Storm pleaded not guilty. Semenov, however, is currently at large.