Founder of Bitcoin Fog found guilty in $400 million cryptocurrency money laundering trial

The federal court has found Roman Sterlingov, the founder of crypto mixing service Bitcoin Fog, guilty of money laundering in connection with illicit drug sales on the dark web. After two days of deliberation, the jury determined that Sterlingov had obscured the origins of crypto transactions, making it difficult to trace the proceeds from criminal activities. The prosecution claimed that Bitcoin Fog had facilitated over $400 million in transactions, including $78 million from infamous dark web marketplaces. This conviction is another victory in the United States’ efforts to combat cryptocurrency-related crimes, following the conviction of FTX’s co-founder, Sam Bankman-Fried, and the recent settlement with Binance. Sterlingov, who holds Russian and Swiss citizenship, denied any involvement with Bitcoin Fog during the trial. He now faces a maximum sentence of 20 years in prison for four counts of money laundering, after spending nearly three years in detention. During the trial, the prosecution presented evidence of how cryptocurrency transactions from dark web platforms were traced through Bitcoin Fog. They also detailed the complex process Sterlingov allegedly used to register the Bitcoin Fog domain name over a decade ago. Additionally, the prosecution provided evidence of minor transactions conducted by Sterlingov to test Bitcoin Fog’s operations before its launch in 2011. Sterlingov admitted to using Bitcoin Fog but denied collecting any fees, contrary to the prosecution’s claims. This case highlights the increasing concern over cryptocurrency’s involvement in money laundering, particularly through services that aim to anonymize transactions. A recent report by Chainalysis for 2024 reveals a troubling trend of rising laundering activities through crypto mixers. The report highlights the significant role of transactions tied to sanctioned entities, accounting for 61.5% of all tracked illicit transactions, totaling $14.9 billion in 2023. Many of these transactions involve cryptocurrency services that are under U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions or are based in sanctioned jurisdictions. The Russia-based exchange Garantex, which was sanctioned for laundering funds for ransomware attackers and cybercriminals, contributed significantly to this volume. This recent case further demonstrates the complex challenges of regulating cryptocurrency transactions globally.