Roman Sterlingov, the founder of the cryptocurrency mixing service Bitcoin Fog, has been convicted by a federal court of laundering money associated with illicit drug sales on the dark web.
Following approximately two days of deliberation, the jury found Sterlingov guilty of obscuring the origins of crypto transactions, complicating efforts to trace financial proceeds from criminal activities. Prosecutors argued that Bitcoin Fog played a pivotal role in masking over $400 million in transactions, with $78 million directly linked to notorious dark web marketplaces.
Sterlingov’s conviction represents a significant milestone in the United States’ intensified crackdown on cryptocurrency-related criminal activities. This series of legal actions includes the conviction of FTX’s co-founder, Sam Bankman-Fried, and a recent settlement with Binance. Despite holding dual Russian and Swiss citizenship, Sterlingov denied involvement with Bitcoin Fog during the trial.
Facing a maximum sentence of 20 years in prison on four charges of money laundering, Sterlingov has already spent nearly three years in detention.
Throughout the month-long trial, prosecutors showcased how investigators traced cryptocurrency transactions from dark web platforms through Bitcoin Fog. Additionally, the trial outlined a complex procedure allegedly employed by Sterlingov over a decade ago to register the Bitcoin Fog domain name.
Further evidence presented suggested Sterlingov engaged in minor transactions from an account under his name to test Bitcoin Fog’s operations before its 2011 launch. While Sterlingov admitted to using Bitcoin Fog, he denied collecting any fees, contrary to the prosecution’s assertions.
Widespread Crypto Laundering Concerns Sterlingov’s case underscores the growing concern over cryptocurrency’s role in money laundering, particularly through services designed to anonymize transactions. A recent 2024 report by Chainalysis highlights an alarming trend of increased laundering activities via crypto mixers.
The report reveals the dominant role of transactions linked to sanctioned entities, comprising 61.5% of all tracked illicit transactions totaling $14.9 billion in 2023. Many of these transactions involve cryptocurrency services sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) or are based in sanctioned jurisdictions.
One significant contributor to this volume was the Russia-based exchange Garantex, sanctioned for laundering money for ransomware attackers and other cybercriminals. This latest case underscores the complex challenges in regulating cryptocurrency transactions globally.
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