A U.S. jury pronounced Roman Sterlingov, the creator of the Bitcoin Fog mixer, guilty of money laundering. While Sterlingov emerged as the latest to face conviction for money laundering through a crypto-mixing service, his legal team intends to contest the jury’s verdict.
In a United States District Court on Tuesday, March 12, the founder of Bitcoin Fog, a significant $400 million cryptocurrency mixing service, was convicted for money laundering. This marks another success in the government’s efforts to clamp down on crypto mixers and their creators.
Following a jury trial, Sterlingov faced guilt on several charges, including money laundering, conspiracy to launder money, running an unlicensed money-transmitting business, and violating D.C.’s Money Transmitters Act.
During the trial, Sterlingov asserted that he merely used Bitcoin Fog, distancing himself from its operation. In response to the verdict, Sterlingov’s attorney, Tok Ekeland, announced in a post on X that he would appeal the decision.
Trial evidence showed Sterlingov’s operation of Bitcoin Fog as a money laundering service from 2011 to 2021, aiding criminals in concealing illicit financial transactions.
Government records indicated that most of Bitcoin Fog’s activities were tied to darknet marketplaces involved in narcotics, computer fraud, abuse, and identity theft. Bitcoin Fog allegedly facilitated transactions for individuals distributing child sexual abuse material.
Trial evidence suggested that the bulk of cryptocurrency deposited to Sterlingov’s crypto exchange accounts originated from Bitcoin addresses associated with Bitcoin Fog.
“Evidence presented at trial clearly showed that the defendant laundered hundreds of millions of illicit funds from the dark web through Bitcoin Fog in an attempt to conceal the origin of those funds,” said Internal Revenue Service (IRS) Criminal Investigation Chief Jim Lee.
Acting Assistant Attorney General Nicole Argentieri affirmed the Justice Department’s unwavering commitment to leveraging technology to uncover and prosecute criminals, regardless of their use of sophisticated concealment techniques.
In his capacity as a professional witness, Verret pledged support for Sterlingov’s appeal, criticizing the on-chain forensics employed to incriminate him.
“The trial lasted four weeks. I testified for a full day and I worked on the case for a year,” said Verret, adding: “The verdict, issued March 12, was ‘guilty.’ They say it four times as the four counts of the indictment are read. It felt like I was punched in the stomach. The only way my brain can process it is to focus on strategies for appeal.”
Post-conviction, the jury authorized the seizure of over 1,300 BTC held in a Bitcoin Fog wallet and more than $350,000 in various cryptocurrencies from a Kraken account.
The maximum sentence for the money laundering conspiracy and money laundering sting charges was 20 years in prison, with the other two charges carrying a maximum of five years in prison. Sterlingov’s sentencing was set for July 15, 2024.
In a separate but connected case, another founder of a crypto mixing service awaits trial later this year. Roman Storm, co-founder of the crypto mixer Tornado Cash, is set to face trial in September for charges linked to the platform’s alleged involvement in laundering money for criminals.
Roman Storm faced three counts: conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and conspiracy to violate the International Emergency Economic Powers Act. Storm pleaded not guilty to all charges against him.
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