- The founder of Bitcoin Fog has been convicted on four charges for operating the site
- Authorities alleged that Roman Sterlingov laundered over 1.2 million bitcoin linked to darknet markets
- Sterlingov faces up to 20 years in prison for his involvement in laundering the funds
The founder of the Bitcoin Fog mixing service has been convicted on four charges relating to the operation of the site which prosecutors said facilitated the laundering of over 1.2 million bitcoin – worth about $860 million at today’s prices – tied to darknet marketplaces. Roman Sterlingov, a 35-year-old Russian-Swedish national, founded Bitcoin Fog in 2011 and helped launder funds obtained by illicit activities such as drug trafficking, computer fraud, and identity theft on the dark web, functioning as a preferred laundering avenue for criminals evading law enforcement. Sterlingov now faces up to 20 years in prison as a result.
Dark Web Connections Sealed Sterlingov’s Fate
Sterlingov was arrested at Los Angeles International Airport in 2021 on charges of money laundering, operating an unlicensed money transmitting business, and conducting money transmission without proper licensing. Bitcoin Fog purportedly operated as a money laundering service for various darknet platforms, including Silk Road and AlphaBay, according to federal officials, so it’s not really a surprise that the authorities ended up taking an interest.
The investigation also shed light on the absence of know-your-customer checks on the platform, as revealed by an undercover IRS agent’s successful transaction through Bitcoin Fog.
Exchange Records Trumped Blockchain Investigation
While court filings suggested that blockchain analysis played a part in identifying the service’s operator, further investigation revealed a reliance on user databases from platforms such as MtGox rather than on-chain transaction tracing. This led to questions from Steerlingov’s representatives regarding the legality of data acquisition methods, particularly regarding privacy violations and the possibility of future enforcement actions against Bitcoin mixing services.
Sterlingov now faces a sentence of up to 20 years for his operation of Bitcoin Fog, a fate he will learn on July 15.
