Bitcoin Fog Mastermind Found Guilty in Historic Money Laundering Case

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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March 13, 2024

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Roman Sterlingov, founder of Bitcoin Fog, a major crypto-mixing service, has been convicted of money laundering in a United States District Court. In a verdict on Tuesday, Roman Sterlingov, 35, was found guilty of multiple charges, including money laundering, money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act. Throughout the trial, Sterlingov maintained that he was merely a user of the service, not its operator. 

Sterlingov Operated Bitcoin Fog till 2021

According to a press release from the US Department of Justice, the evidence presented during the trial revealed that Bitcoin Fog founder Roman Sterlingov had operated the business from October 2011 to April 2021, providing a money laundering service for criminals seeking to conceal their illicit proceeds from law enforcement. Over the course of a decade, the service facilitated the movement of more than 1.2 million Bitcoin, equivalent to $400 million at the time of the transactions. The majority of these funds were traced back to darknet marketplaces associated with narcotics, computer fraud abuse, identity theft, and the distribution of child sexual abuse material.“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,” Jim Lee, Chief of the Internal Revenue Service (IRS) Criminal Investigation, said. Meanwhile, Sterlingov’s attorney, Tok Ekeland, stated that they plan to appeal the verdict.

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

— Tor Ekeland (@TorEkelandPLLC) March 12, 2024

The jury has ordered the forfeiture of assets seized from Bitcoin Fog, which includes 1,354 BTC held in a Bitcoin Fog wallet and nearly $350,000 in various cryptocurrencies held in a seized Kraken account.

The most serious charges, money laundering conspiracy, and money laundering, carry a maximum sentence of 20 years in prison, while the other two charges carry a maximum sentence of five years.

Sterlingov’s sentencing is scheduled for July 15.

Tornado Cash Co-Founder Set to Face Trial

In a separate case, Roman Storm, co-founder of the controversial cryptocurrency mixer Tornado Cash, is set to face trial in September. 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.Indicted in August 2023, he is out on a $2 million bond and has emphasized the case’s potential implications for Web3 developers and individuals concerned about software and privacy. While supporters of Tornado Cash argue that it merely provides software for decentralized money transmission and does not engage directly in money transmission, the crackdown on the platform has been viewed as a potential threat to developers working on privacy-oriented applications.As reported, the US Treasury has added Tornado Cash to its Specially Designated Nationals list, effectively banning Americans from using this mixer. The Department claimed that the mixer “has been used to launder more than $7bn worth of virtual currency since its creation in 2019.”