Bitcoin Fog Founder Roman Sterlingov Sentenced To 12.5 Years

Roman Sterlingov, a Russian-Swiss national, was convicted of multiple charges related to operating Bitcoin Fog, a cryptocurrency “mixer” that obscured the origins of digital currency transactions.

The founder of Bitcoin Fog, Roman Sterlingov, has been sentenced to 12.5 years in prison for operating a large cryptocurrency mixing service that laundered over $400 million in criminal proceeds.

The sentence was handed down by U.S. District Judge Randolph Moss in Washington federal court on Monday. In addition to the prison term, Sterlingov was also ordered to forfeit $395 million in assets, including seized cryptocurrency and his interest in a Bitcoin wallet containing over $103 million in Bitcoin.

Sterlingov, a Russian-Swiss national, was convicted of multiple charges related to operating Bitcoin Fog, a cryptocurrency “mixer” that obscured the origins of digital currency transactions. Prosecutors said Bitcoin Fog provided a convenient way for criminals to launder money obtained from illicit activities, including those involving narcotics on darknet markets.

Following a jury trial in March, Sterlingov was found guilty of conspiring to launder money, money laundering, and operating an unregistered money transmitting business.

Bitcoin Fog, which was operational from 2011 to 2021, allowed users to combine or “mix” digital assets, making it difficult to trace individual transactions. Prosecutors said Sterlingov’s service aimed to facilitate untraceable transactions for large-scale money laundering activities.

According to the Justice Department, Sterlingov charged users a fee of 0.0005% to 1% of the transacted amount, which generated him millions of dollars in proceeds. The prosecutors highlighted that Sterlingov's service was used to launder proceeds from ransomware attacks, darknet narcotics sales, and fraud schemes.

In a statement, Principal Deputy Assistant Attorney General Nicole M. Argentieri said, "Roman Sterlingov laundered over $400 million in criminal proceeds through Bitcoin Fog, a service he operated for over a decade to facilitate illicit activity on a grand scale."

"This sentence demonstrates the department's commitment to prosecuting those who knowingly facilitate criminal conduct and highlights the critical role the private sector plays in detecting and reporting suspicious activity," Argentieri added.

During the sentencing hearing, Judge Moss noted the need for deterrence in Sterlingov's case, considering the vast amount of criminal proceeds laundered through his service. He also took into account Sterlingov's lack of cooperation with law enforcement and his failure to accept responsibility for his actions.

Sterlingov's attorney had requested a sentence of seven years, arguing that his client was not directly involved in the criminal activities that generated the proceeds laundered through Bitcoin Fog. However, the prosecution maintained that Sterlingov played a crucial role in facilitating these illicit transactions.

The prosecutor in the case, Assistant U.S. Attorney Andrew Pak, stated, "Sterlingov's cryptocurrency mixing service, Bitcoin Fog, was a critical tool for criminals to conceal the proceeds of their crimes and to continue victimizing our communities."

"Criminals used Bitcoin Fog to launder proceeds from ransomware attacks, darknet narcotics sales, and fraud schemes, among other predicate offenses. Sterlingov's service also posed a threat to national security by facilitating the movement of illicit funds for foreign threat actors," Pak added.

Sterlingov's service was shut down in April 2021 following a joint operation by the Justice Department, Europol, and law enforcement agencies in several countries. At the time, authorities also seized over $200 million in cryptocurrency linked to Bitcoin Fog.

The Justice Department has been ramping up its efforts to crack down on cryptocurrency-related crimes, including money laundering and illicit transactions. In recent months, several individuals have been charged and sentenced for operating cryptocurrency mixers or engaging in other activities that facilitate criminal use of digital assets.

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