The individual behind the world’s lengthiest Bitcoin money laundering platform is facing a 50-year imprisonment term following a conviction in a US court.
Roman Sterlingov, aged 35, managed Bitcoin Fog, a service utilized by cybercriminals for concealing their digital footprints while engaging in illicit activities involving cryptocurrency.
The modus operandi involved sending Bitcoin tokens to Bitcoin Fog, where they would be mixed with funds from other users and returned in smaller transactions to the original owner. Sterlingov profited by collecting a fraction of each transaction’s value.
The Department of Justice (DoJ) disclosed that law enforcement previously confiscated 1,354 Bitcoin from a Bitcoin Fog wallet, along with \(349,625 in other tokens from the Kraken crypto exchange. At today’s exchange rate, the Bitcoin’s value nears \)100 million.
Bitcoin Fog operated from October 2011 to April 2021 until authorities apprehended the Russian-Swede and shut down the service. Throughout its existence, it is estimated that over 1.2 million Bitcoin tokens were laundered, amounting to approximately $400 million.
The service served various criminal activities, predominantly catering to customers of dark web marketplaces involved in purchasing illegal items like drugs and stolen digital assets. Additionally, dark web marketplaces themselves utilized Bitcoin Fog’s mixing services.
Welcome to Video members, associated with a South Korean dark website enabling the exchange of child sexual abuse material (CSAM), also utilized the service.
Lisa Monaco, deputy attorney general, stated, “Roman Sterlingov believed he could launder hundreds of millions of dollars in Bitcoin unnoticed within the depths of the internet. However, he was mistaken.”
Multiple allegations were brought against Sterlingov, including conspiracy to launder money and operating an unauthorized money-transmitting business. He was found guilty on all counts. His sentencing is scheduled for July 15.
Bitcoin Mixing Services Explained
Bitcoin mixing services, like Bitcoin Fog, have been operational for years, providing a veil of anonymity for cryptocurrency transactions.
These services complicate the tracing of Bitcoin ownership by law enforcement, as they merge funds from multiple users into an untraceable pool.
Trading digital currency Coin mixers, according to OKX, are programs that combine bitcoin assets from multiple users, making it difficult to trace their origins. This process enhances privacy and security by obstructing tracking efforts by governments, hackers, or malicious entities.
While crypto mixers are not inherently unlawful, they must adhere to regulatory requirements in most jurisdictions to prevent illicit use. In the US, for instance, mixing services must register as money transmitters under the Bank Secrecy Act.
Chainalysis, a blockchain data platform, reports that very few mixing services currently meet the criteria for legitimate operation in the US. It emphasizes that the majority of users employ these services for financial privacy purposes, rather than engaging in illicit activities.