Russian-Swedish national Roman Sterlingov, 35, operated Bitcoin Fog from 2011 through 2021. During that time, the mixer became the go-to darknet hub for cybercriminals seeking to launder their ill-gotten gains.
“Roman Sterlingov thought he could use the shadows of the internet to launder hundreds of millions of dollars in bitcoin without getting caught. But he was wrong,” said Deputy Attorney General Lisa Monaco.
In exchange for a fee, Sterlingov’s program anonymized the identities of buyers and sellers who ran their cryptocurrency through it. This gave them peace of mind that they could obfuscate how their illicit funds were obtained and then convert them into cash without fear of authorities freezing or seizing their accounts.
His clientele flocked to him from darknet markets such as Silk Road, Silk Road 2.0, Evolution, and AlphaBay.
Throughout its ten-year lifespan, Bitcoin Fog laundered over 1.2 million bitcoin, valued at roughly US$400 million at the time of the transactions. The majority of this cryptocurrency, federal authorities said, was procured illicitly through the sale of illegal narcotics, and child pornography.
“Based on Bitcoin Fog’s transaction activity over time, Sterlingov made millions in commissions from Bitcoin Fog transactions,” U.S. Internal Revenue Service said.
But it seems now that they will have to change up their tactics.
“Darknet criminals should know by now that operations like Bitcoin Fog cannot provide the anonymity for cryptocurrency transactions that they claim they can,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “This conviction demonstrates that the United States can and will combat the use of technology to carry out crimes in cyberspace.”
While a Bitcoin address owner can be set as anonymous, prosecutors demonstrated at trial that law enforcement can identify a particular owner by analyzing a Bitcoin’s blockchain, which logs the sale and transfer of ownership of any given crypto unit.
This analysis can also reveal additional accounts controlled by the same individual or entity, the IRS said.
Sterlingov was originally arrested in April 2021 while traveling through Los Angeles International Airport and has remained in custody ever since.
The Russian-Swedish national was convicted on various money laundering counts, each of which carries a potential maximum sentence of 20 years in prison. His guilty ruling also deprived him of several seized assets, including 1,354 Bitcoin found in his digital wallet and $349,625 in various other cryptocurrencies.
Sentencing is set for July 15, 2024, where he could face additional forfeiture penalties.