- Roman Sterlingov sentenced to 12.5 years for managing Bitcoin Fog, a crypto mixer used for illegal activities
- Bitcoin Fog processed over 1.2 million bitcoin transactions, involving crimes like drug distribution and hacking
- Sterlingov faces a $395M fine and the seizure of over $1.7M in cryptocurrency and assets
The 36-year-old dual Russian-Swedish citizen was just sentenced to 12 years and six months in prison for operating Bitcoin Fog, one of the darknet’s longest-running money-laundering services.
But to me, this feels like a landmark moment in the ongoing cat-and-mouse battle between law enforcement and cryptocurrency-based financial crime.
Bitcoin Fog’s Role as a Cryptocurrency “Mixer”
Bitcoin Fog was a “mixer” from 2011 until 2021, mixing the transaction history and identities of its users. That is to say, users could use the service to “launder” their bitcoin via the service, making it untraceable by law enforcement as to its origins and transactions.
Over a ten-year period, Bitcoin Fog laundered over 1.2 million transactions valued at over $400 million—a figure that can take one’s breath away if they stop to consider just how deep the darknet’s tentacles reach.
As the proof to come had tended to disclose, a significant portion of this money derived from darknet marketplaces dealing in drugs, identity theft, and other serious crimes.
Conviction and Massive Fines Reflect the Scope of the Crime
Where a turning point is to be determined, it would be March 2024. Sterlingov was convicted by the jury of everything from conspiracy to commit money laundering to operating an unlicensed money transfer business by the end of a month-long trial.
Apart from the prison sentence, the court ordered Sterlingov to pay $395 million in fines—an impressive amount, which, in my opinion, says a lot about the value of the committed financial crime in dollars and cents.
Seized Assets and Forfeited Bitcoin Wallet
Authorities seized nearly $1.76 million in crypto and other assets from Sterlingov, and he forfeited his interest in the Bitcoin Fog wallet, which today holds 1,345 Bitcoin, or more than $103 million.
The idea that such figures were left sitting in a digital wallet for years on end is really the magnitude of the operation.
Can you think of having this kind of fortune, hidden but by far and large lost?
International Efforts to Combat Cryptocurrency Crime
Impressive in itself, the investigation drew together the IRS-CI District of Columbia Cyber Crime Unit, the FBI Washington Field Office, and international bodies including Europol, together with law enforcement in Japan, Sweden, Denmark, Romania, and the UK.
The level of coordination required on a case of this size is a testament to just how complex the fight against cryptocurrency-based crime has become. I think that it also underlines global recognition of the fact that financial crime in the virtual world has become an issue that crosses borders.
A New Era of Cybercrime Prosecution
The prosecution was handled by Trial Attorneys Jeff Pearlman and C. Alden Pelker of the Computer Crime and Intellectual Property Section at DOJ, with assistance from Special Assistant U.S. Attorney Christopher B. Brown of the District of Columbia.
This work, combined with the support of the paralegals and specialists in the field, represents a new level of sophistication in facing cybercrime.
An Important Milestone in Regulating Digital Currency
In my opinion, if one were to ask me, sentencing Sterlingov marks a significant moment in the regulation and enforcement of digital currency. Bitcoin Fog was no ordinary anonymous platform; it was among the darknet’s early pioneers in cryptocurrency laundering.
It had enabled criminality for upwards of a decade by making it appear as though no one would ever be able to trace money movement in substantive amounts.
This, in addition to the heavy fine and asset forfeiture, sends a clear message: that the authorities mean business, even when the crimes are committed in cyberspace
