On March 12, a federal jury in Washington, D.C., unanimously found Roman Sterlingov, a dual Russian-Swedish national, guilty on all charges related to his involvement with Bitcoin Fog, which operated as a bitcoin mixing service on the darknet. 

Sterlingov was involved in operating Bitcoin Fog from 2011 to 2021. According to the DOJ, Bitcoin Fog is notorious as a premier cryptocurrency “mixer” that served as a favored money laundering hub for criminals seeking to conceal illegal gains from law enforcement. Over its ten-year tenure, Bitcoin Fog facilitated the transfer of more than 1.2 million bitcoins, valued at approximately $400 million during the transactions. Most of these cryptocurrencies purportedly originated from darknet marketplaces and were linked to illicit narcotics, cybercrimes, identity theft, and child sexual exploitation material.

Initially promoted as a tool for anonymizing Bitcoin transactions, Bitcoin Fog primarily catered to darknet markets like Agora, Silk Road, Silk Road 2.0, Evolution, and AlphaBay. Despite the suggested anonymity of cryptocurrency transactions, law enforcement’s analysis of the blockchain revealed direct transactions between Bitcoin Fog and known darknet markets, totaling over $78 million.

Under United States law, it is illegal to conspire to launder money, which involves conducting financial transactions to hide the origins of unlawfully obtained funds. It is also a crime to engage in or attempt financial transactions using property known to be from illegal activities to conceal its origins. Operating a money-transmitting business without the required licenses from either the state or FinCEN is also unlawful.

Sterlingov’s arrest at Los Angeles International Airport on April 27, 2021, led to his conviction on charges including money laundering conspiracy, sting money laundering, operating an unlicensed money transmitting business, and violations of the D.C. Money Transmitters Act. Each money laundering charge carries a maximum sentence of 20 years in prison, while operating an unlicensed money transmitting business or violating the D.C. Money Transmitters Act carries a maximum sentence of five years. Additionally, the jury granted forfeiture of assets seized by law enforcement, including over 1,354 bitcoins held in a Bitcoin Fog wallet, as well as $349,625 and various cryptocurrencies.

The Department of Justice is actively pursuing Bitcoin-related cases. “Darknet criminals should be aware that operations like Bitcoin Fog cannot guarantee the anonymity of cryptocurrency transactions as they claim,” stated U.S. Attorney Matthew M. Graves for the District of Columbia. “This conviction underscores the United States’ commitment to combatting cybercrimes facilitated by technology.”

The attorneys at Chilivis Grubman represent clients of all sizes in connection with government investigations. If you need assistance with such a matter, please contact us today.