Bitcoin Fog Operator Convicted of Laundering $400 Million
A U.S. federal court has found Roman Sterlingov, a dual citizen of Russia and Sweden, guilty of operating the cryptocurrency mixer Bitcoin Fog from 2011 to 2021. During this period, the service processed 1.2 million bitcoins, which was approximately $400 million at the time of the transactions.
Law enforcement officials report that Bitcoin Fog was one of the oldest cryptocurrency mixers on the dark web, and cybercriminals from various underground marketplaces used it to launder their illicit proceeds. The mixer’s popularity among criminals is evident from the fact that over 1.2 million bitcoins passed through it in ten years, some of which were linked to criminal activities. While the value at the time was about $400 million, at today’s bitcoin prices, that amount would be equivalent to $87.5 billion.
According to the U.S. Department of Justice, “Most of this cryptocurrency came from darknet marketplaces and was associated with illegal drug trafficking, computer crimes, identity theft, and child sexual abuse.” Deputy Attorney General Lisa Monaco emphasized that a team of experts thoroughly analyzed blockchain transactions to identify and prosecute Sterlingov, presenting the court with over three terabytes of data related to the case. Investigators claim they traced financial transactions from 2011 that allegedly linked Sterlingov to payments made for registering the Bitcoinfog.com domain. They also used blockchain analysis to track “test transactions” made in preparation for launching the money laundering service.
Sterlingov Maintains Innocence
Throughout the trial, Sterlingov insisted on his innocence, accusing U.S. authorities of using “pseudoscience” and unreliable blockchain analysis methods to track bitcoins. In an interview with Wired from a jail in Northern Virginia, Sterlingov stated that he did not create Bitcoin Fog and described the trial as a “Kafkaesque nightmare.” He claimed he was merely a user of Bitcoin Fog, never operated the service, and never used cryptocurrency for illegal activities.
Sterlingov’s attorney, Tor Ekeland, argued that the evidence from 2011 cited by investigators included many different addresses, and the only reason Sterlingov was targeted was that he was the only one who had completed Know Your Customer (KYC) verification at the time. According to Ekeland, witnesses confirmed that Sterlingov either sold bitcoins or communicated with the founders of Bitcoin Fog, but this does not prove he operated the service.
Potential Sentencing and Appeal
Sterlingov now faces a maximum sentence of 20 years in prison for conspiracy to launder money and money laundering itself, as well as up to five years for operating an unlicensed money transmitting business. Sentencing is scheduled for July 2024, but the defense plans to appeal the verdict.