Bitcoin Fog founder sentenced to jail in $400 million laundering scheme

Crypto mixing tool Bitcoin Fog operator Roman Sterlingov has been sentenced to jail for 12 years and 6 months over a laundering scheme. The sentencing is coming months after a jury trial that found Sterlingov guilty of laundering funds for criminals. Aside from that charge, he was also charged with operating an illegal money-transmitting business.

During his sentencing, the District Judge of Washington Randolph Moss ordered Sterlingov to forfeit about $300 million worth of assets to the government. Bitcoin Fog is one of the oldest crypto mixing platforms, with the Department of Justice noting that it has been around since 2011.

According to the DOJ report, Sterlingov, a dual national from Switzerland and Russia, has been in charge of the platform’s operations. The report also revealed that the platform had laundered about $1.2 million, with most of it coming from the dark web.

Deputy Attorney General Lisa Monaco was impressed with the verdict, noting the agency’s will to crack down on bad actors in the country. She said Sterlingov ran the longest laundering operation in the dark web and has paid for it. Monaco noted that he opened up a haven to criminals worldwide, providing them with a place to store their illicit funds.

Sterlingov’s attorney questioned the prosecution’s claims

The prosecutors were not pleased with the verdict because Sterlingov escaped the maximum sentence they wanted. The prosecutors asked for a 30-year sentence because of the weight of the crime and Sterlingov’s refusal to admit owning the platform or making money from it, even under oath.

Meanwhile, the defense counsel Tor Ekeland asked for a seven-year sentence because there was no direct link between his client and the platform. During the trial, Sterlingov refused to admit he owned Bitcoin Fog, saying he was only a platform user.

The trial attracted the interest of freelance journalist Lola L33tz, who said it was a miscarriage of justice. Lola said the case highlights the government’s plan to crack down on financial privacy. She noted that the Chainalysis tools used in the trial cannot be trusted, and should not be relied upon to send a person to jail for over 10 years.

Lola used the testimony of forensic accountant J.W Verret, who served as an expert witness for the defendant as an example. Verret highlighted that there is no link between Sterlingov and Bitcoin Fog, noting that about 19,939 BTC at the pre-trial hearing is not accounted for. Other experts have also called Chainalysis tools into question, discussing its accuracy.

Lola noted that the verdict means that the government will now own Sterlingov’s remaining BTC, while the ones he allegedly made from the criminal activity are still unaccounted for. However, the judge and prosecutors did not follow this line of thought. Chainalysis has also debunked rumors of its tools being inaccurate, stating that the decision of the judge to admit the evidence gathered using its tools sets a precedent for future use.

Bitcoin Fog verdict is a warning to other crypto mixers

During the announcement of the verdict, Judge Moss agreed that a life sentence would be too harsh for the degree of the crime. However, he feels the ruling will send a big warning to the crypto industry, especially after several cases related to compliance have come out of the sector.

Crypto community members have voiced their opinions on the verdict, noting that the United States government has sent clear warnings to crypto mixers. Crypto podcaster Mario Nawfal opined that the verdict is not a slap on the wrist as the government has said platforms and their users that they will pay heavily if they play shady.

Similarly, some founders of crypto-mixing platforms are currently incarcerated and awaiting trial in the United States. The list has Tornado Cash founders Roman Storm and Roman Semenov, as well as Samourai wallet co-founder Keonne Rodriguez. The mixer’s CTO William Hill is also on the list. Most of these mixers have carried out transactions involving a cumulative larger amount than Bitcoin Fog, raising concerns over their jail terms if they are found guilty.

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