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Bitcoin Fog: Roman Sterlingov Convicted In A $400 Million Crypto Laundering Operation

The US Department of Justice claims that Bitcoin Fog simply became a criminal’s shelter for hiding money for the proceeds of various criminal activities.

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In a notable legal development, the founder of Bitcoin Fog, a cryptocurrency mixing service, was convicted by a federal jury on Tuesday, March 12, 2024,  for his involvement in laundering 1.2 million bitcoins — equivalent to approximately $400 million at current values — generated from darknet market exchanges.

Roman Sterlingov, a 35-year-old with dual Russian-Swiss citizenship, had faced arrest in April 2021. In its aftermath, he was notified to have faced different charges, including money laundering, failing to get authorization to share money, and running an unauthorized money transmission company. After his detention, additional accusations of money laundering conspiracy were brought against him

Despite Sterlingov and his lawyer’s argument that he was not involved in running Bitcoin Fog or receiving any fees, aside from admitting his personal use of the service, after a one-month trial, the jury found Sterlingov complicit in all the charges.

The Suspicious History Of Bitcoin Fog

As the trial proceeded it came out that Bitcoin Fog was running its business from October 2011 to April 2021 which is around ten years. The platform conducted more than 1.2 million Bitcoin transactions totaling a huge amount of over $400 million which was significant during that period, hence enabling criminals to conceal from law enforcers their illegal proceeds.

Most of the transactions performed through Bitcoin Fog could be traced back to the darknet marketplaces which offer a wide range of illegal services that range from narcotics to identity theft, cyber fraud, and the distribution of child sexual abuse materials, which further illustrates the illicit nature of Bitcoin Fog’s users.

Ramifications And Legal Precedent

Sterlingov’s conviction highlights the activity of the US and European authorities to tackle sophisticated illicit cryptocurrency transactions.

And notably, the persons who formerly worked for Bitcoin mixers, which is Larry Harmon, who was the CEO of Helix, and lastly, Ilya Lichtenstein, along with his wife Heather “Razzlekhan“, laundered bitcoins worth $3.6B, which was hacked in 2016 from the Bitfinex. Last year, Coin Desk reported the cases of Lichtenstein who admitted his crime in August 2020 and awaits judgment, and Harmon in 2021 after which he paid the amount of 4400 bitcoin and was ordered to pay a fine of $60 million.

As per the Coin Telegraph report, the court has authorized the seizure of funds from the crypto mixer. These assets include 1,354 BTC in a wallet address on Bitcoin Fog. Furthermore, $359,048.01 in different cryptocurrencies was deposited to a Kraken bank.

The punishment of the Sterlingov will probably be a basis for the upcoming criminal trials of Tornado Cash founder Alexey Pertsev in the Netherlands and Roman Storm in the United States.

Possible Penalties And Appeals

The sentence is scheduled for July 15 and Sterlingov can receive more than 20 years of imprisonment for the major offense. Mr. Ekeland who is Mr. Sterlingov’s lawyer has stated that they are preparing to appeal the decision in the higher court.

Evaluating The Effect

  • Legal Precedents: Sterlingov’s sentence raises the legal bar for future cases about cryptocurrency mixing products of the kind.
  • Regulatory Implications: This instance demonstrates the constantly evolving mechanisms of supervision aimed at preventing and mitigating the use of cryptocurrencies in illegal transactions.
  • Crypto Mixing Services: The policy banning services like Bitcoin might prevent or eventually deter the operation and usage of similar platforms, consequently driving the sector to more transparency.

Also Read: EU Parliament Revises Policy On Sanctions that Include Digital Assets Controls

Future Outlook: Fighting Crypto Crime

The verdict of Sterlingov is a major win for the law enforcement organizations that are working hard to fight cybercrimes in the sphere of crypto. The USA Department of Justice through its US criminal division reiterates its stand on exposing and prosecuting persons who may use technology in trying to hide their crimes including the most elaborate way of doing so.

Sterlingov’s conviction is a clear sign that the murky world of cryptocurrency laundering will face increased scrutiny, and justice will always be on the side of the law.

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Published Date

March 14, 2024

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