In a significant blow to the crypto mixing industry, the founder of Bitcoin Fog, a popular service worth $400 million, has been found guilty of money laundering in a United States District Court. Roman Sterlingov, 35, was convicted 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 his innocence, claiming that he was merely a user of the service and not its operator. His attorney, Tok Ekeland, announced that they will be appealing the verdict.
Evidence presented during the trial revealed that Sterlingov operated Bitcoin Fog from October 2011 to April 2021, providing a platform for criminals to conceal their illicit funds from law enforcement. Over the course of a decade, the service facilitated the movement of over 1.2 million Bitcoin (BTC), equivalent to $400 million at the time of the transactions. The majority of these funds were linked to darknet marketplaces involved in narcotics, computer fraud, abuse, identity theft, and the distribution of child sexual abuse material.
The conviction was based on evidence that showed the majority of crypto deposited into Sterlingov’s exchange accounts originated from “Bitcoin clusters” associated with Bitcoin Fog. Internal Revenue Service (IRS) Criminal Investigation Chief Jim Lee stated that the trial conclusively demonstrated Sterlingov’s involvement in laundering hundreds of millions of dollars in illicit funds.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division emphasized the division’s commitment to prosecuting those who use technology to hide their crimes, regardless of the complexity of their schemes.
Roman Sterlingov’s appeal will be supported by J.W. Verret, who is critical of the on-chain forensics used in the case. Verret, a professional witness, testified during the trial and believes that the evidence against Sterlingov is flawed.
As a result of the conviction, the jury has ordered the forfeiture of assets linked to the crypto mixer. This includes 1,354 BTC held in a Bitcoin Fog wallet and approximately $350,000 in various cryptocurrencies held in a seized Kraken account.
The most serious charges carry a maximum sentence of 20 years in prison, while the other charges carry a maximum sentence of five years. Sentencing has been scheduled for July 15.
In a related development, another crypto mixer founder, Roman Storm, is set to face a criminal trial in September. Storm is the co-founder of Tornado Cash, a controversial cryptocurrency mixer that was sanctioned in August 2022. He has pleaded not guilty to 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.