On Tuesday, March 12, the founder of Bitcoin Fog, a cryptocurrency mixing service valued at $400 million, was convicted of money laundering in U.S. District Court. Roman Sterlingov, aged 35, was found guilty of money laundering, conspiracy to commit money laundering, operating an unlicensed money transmission business, and violating the Washington, D.C. Money Transmission Act. This verdict is a significant victory for the government amid its crackdown on cryptocurrency mixing services and their founders.
Throughout the trial, Sterlingov argued that he was merely a user of the Bitcoin Fog service, not its operator. His attorney, Tok Ekeland, stated in a March 12 post that they intend to appeal the verdict. Despite Sterlingov's claims, evidence presented at trial indicated that he operated Bitcoin Fog from October 2011 to April 2021, providing money laundering services to criminals seeking to conceal illicit proceeds from law enforcement.
The evidence revealed that Bitcoin Fog facilitated the laundering of over 1.2 million Bitcoins, valued at $400 million at the time of the transactions. Most of these funds were sourced from darknet markets associated with illicit activities such as drugs, computer fraud, identity theft, and the distribution of child sexual abuse material. The government linked the majority of the deposited cryptocurrencies to a "Bitcoin cluster" associated with Bitcoin Fog.
Special Agent Jim Lee of the IRS Criminal Investigations emphasized the significant sums laundered through Bitcoin Fog, attempting to conceal their illicit origins. Nicole M. Argentieri, acting assistant attorney general for the Justice Department’s Criminal Division, reiterated the department's commitment to prosecuting individuals who use technology to conceal crimes, regardless of the sophistication of their schemes.
The verdict authorized the seizure of assets from the cryptocurrency mixer, including 1,354 Bitcoin held in a Bitcoin Fog wallet and nearly $350,000 in various cryptocurrencies held in a seized Kraken account. Sterlingov faces a maximum penalty of 20 years in prison for the most serious charges, while sentencing is scheduled for July 15. Additionally, another cryptocurrency mixer founder, Roman Storm, co-founder of Tornado Cash, is set to stand trial later this year on charges including conspiracy to launder money and operating an unlicensed money transfer business.
