Bitcoin Fog Founder Convicted of Laundering $400M in Untraceable Crypto Transactions
In Brief
Bitcoin Fog founder Roman Sterlingov was accused of laundering over $400 million from darknet markets while also selling illegal drugs.
Founder of a cryptocurrency mixing service Bitcoin Fog — Roman Sterlingov, was convicted in a Washington federal court for assisting in the laundering of tens of millions of dollars originating from darknet markets primarily engaged in the sale of illegal drugs.
According to the prosecutors, Roman Sterlingov provided a service that obscured digital tokens, introducing complexity to tracing the source of proceeds from unlawful activities. While operating, Bitcoin Fog processed over $400 million in untraceable transactions, including $78 million linked to known darknet markets.
Roman Sterlingov was found guilty on all four counts–conspiring to launder money, money laundering, and two counts related to operating an unregistered money transmitting service. The most serious charges could lead to a maximum prison sentence of up to 20 years, and the sentencing is scheduled for July 15th.
During the trial, prosecutors presented evidence detailing how the government traced the flow of cryptocurrency from darknet markets through Bitcoin Fog. They also outlined a multistep process Roman Sterlingov allegedly utilized over a decade ago to pay for the Bitcoin Fog domain name. In addition, the government enlisted the testimony of two other individuals involved in cryptocurrency-related crimes: Ilya Lichtenstein, who admitted to a money laundering conspiracy last year, and Larry Harmon, who acknowledged running a mixer called Helix.
Ilya Lichtenstein, who faced charges, informed jurors that he used Bitcoin Fog to launder a portion of the $4.5 billion in cryptocurrency stolen from the Bitfinex hack. However, Ilya Lichtenstein and Larry Harmon claimed they did not know Roman Sterlingov.
Roman Sterlingov refuted any involvement in running Bitcoin Fog. He also testified that he had a background in information technology, assisting clients in creating domain names during his employment with a marketing and web firm and working as a freelancer. He expressed uncertainty regarding whether he created the Bitcoin Fog domain name and doubted that he had done so.
Additionally, Roman Sterlingov stated that he was a user of Bitcoin Fog but contested the government’s assertion that he collected fees for the services provided.
Once Favored by Cybercriminals, Cryptocurrency Mixers Experience a Decline in Popularity
Cryptocurrency mixers, alongside exchanges and decentralized finance (DeFi) platforms, serve as a useful means for cybercriminals to obscure the origin of funds, making them highly appealing for illicit activities. However, throughout 2023, cryptocurrency mixers witnessed a decrease in popularity. These platforms received $504.3 million worth of cryptocurrency from addresses linked to illicit activities, indicating a decline from the $1 billion recorded in 2022, as reported by Chainalysis.
As the legal proceedings conclude, the conviction of Roman Sterlingov sheds light on the illicit use of cryptocurrency mixers, emphasizing the ongoing challenges in regulating financial crimes and preserving security in the digital realm.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
