Cryptocurrency Mixer Bitcoin Fog Convicted of Crypto Cash Laundering

The founding father of a cryptocurrency mixing service often called Bitcoin Fog was convicted in Washington federal courtroom of serving to to launder tens of tens of millions of {dollars} from darknet markets recognized for promoting unlawful medication.

A jury on Tuesday concluded Roman Sterlingov, 35, offered a service that jumbled digital tokens to make it harder to search out the supply of proceeds from unlawful actions. Prosecutors mentioned Bitcoin Fog processed greater than $400 million (roughly Rs. 3,375 crore) in untraceable transactions, together with $78 million (roughly Rs. 658 crore) involving recognized darknet markets. 

The decision is the most recent win for the US in a crackdown on crypto criminals, together with the November conviction of FTX co-founder Sam Bankman-Fried. Sterlingov, a Russian-Swedish nationwide who testified in his personal protection and denied he ever ran Bitcoin Fog, faces as much as 20 years in jail on essentially the most critical fees. Sterlingov, who’s been in custody for almost three years, shall be sentenced on July 15. 

“The defendant arrange the entire operation to assist criminals conceal their belongings,” prosecutor Catherine Pelker advised jurors throughout closing arguments. Pelker mentioned it’s clear from the proof that Sterlingov was “instrumental” in organising Bitcoin Fog.

After about two days of deliberations, jurors discovered Sterlingov responsible on all 4 counts, which included conspiring to launder cash, cash laundering, and two fees associated to operating an unregistered cash transmitting service.

“Darknet criminals ought to know by now that operations like Bitcoin Fog can not present the anonymity for cryptocurrency transactions that they declare they’ll,” Matthew M. Graves, the US Lawyer for the District of Columbia, mentioned in a press release.

Protection lawyer Tor Ekeland referred to as the decision “disappointing” and mentioned they’ll attraction. 

“That is simply the midway level,” Ekeland mentioned.

In the course of the monthlong trial, prosecutors confirmed jurors how the federal government traced the circulate of crypto from darknet markets by Bitcoin Fog. In addition they highlighted a multistep course of they are saying Sterlingov used to pay for the Bitcoin Fog area title greater than a decade in the past.

The federal government additionally turned to 2 different crypto criminals to testify about mixers: Ilya Lichtenstein, who pleaded responsible to a cash laundering conspiracy final yr, and Larry Harmon, who admitted to operating a mixer referred to as Helix. 

Lichtenstein, who was charged alongside together with his social-media rapper spouse, advised jurors he used Bitcoin Fog to launder a number of the $4.5 billion (roughly Rs. 37,977 crore) in crypto stolen from the hack of Bitfinex. Each he and Harmon mentioned they did not know Sterlingov.

Sterlingov testified he labored in data expertise and helped create domains for shoppers whereas employed by a advertising and net agency and as a freelancer. He mentioned he did not keep in mind whether or not he created the Bitcoin Fog area title and doubted that he’d carried out so. He additionally did not recall sure transactions, noting they’d occurred way back. 

The federal government mentioned it discovered some small-value transactions that originated from an account registered in Sterlingov’s title that appeared to check Bitcoin Fog earlier than it launched in 2011. Sterlingov has mentioned he was a consumer of Bitcoin Fog, however did not accumulate charges as the federal government claimed.

“There isn’t a proof anyplace that Mr. Sterlingov operated Bitcoin Fog,” together with no eyewitness accounts or server logs, Ekeland advised jurors throughout closing arguments. 

The federal government did not discover any references to Bitcoin Fog on Sterlingov’s digital gadgets or notebooks, Ekeland mentioned. He additionally questioned the logic of Sterlingov utilizing a secretive multistep course of to fund Bitcoin Fog when the transaction began with an easily-traceable account registered in Sterlingov’s title.

The protection additionally questioned the reliability of Wall Avenue-backed agency Chainalysis, which the Justice Division and Treasury Division have constantly used to assist hint the circulate of crypto in cash laundering instances. 

The federal government mentioned that the corporate is dependable, and the decide agreed. Prosecutors mentioned additionally they used different strategies to hyperlink Sterlingov to working Bitcoin Fog. Chainalysis has beforehand referred to as assaults on its credibility a “fundraising ploy” and an effort to help the crypto world escape accountability.