Bitcoin Fog operator faces 20 years in prison for money laundering

Roman Sterlingov, the operator behind the crypto mixer Bitcoin Fog, has been convicted of facilitating the laundering of millions of dollars. These funds were primarily derived from darknet markets involved in illegal drug sales.

The conviction was handed down by a Washington federal court jury, which found Sterlingov guilty on all four counts after two days of deliberation.

Sterlingov, 35, was initially charged in 2021 with money laundering and operating an illegal money transmission service. Per the court papers, Bitcoin Fog had processed hundreds of millions of dollars, with $78 million traceable to known darknet markets. Sterlingov faces a maximum sentence of up to 20 years in prison.

The trial featured testimony from other individuals involved in cryptocurrency crimes, including Ilya Lichtenstein and Larry Harmon, who have both pleaded guilty to money laundering charges related to their own crypto activities.

According to prosecutors, Sterlingov ran Bitcoin Fog from October 2011 to April 2021. The service was known as a cryptocurrency “mixer” or “tumbler,” notorious for being used by criminals to launder money and hide illegal earnings from the police. Over its ten years, until Sterlingov’s arrest stopped it, Bitcoin Fog processed over 1.2 million bitcoin (BTC)—worth around $400 million at the time. Most of this cryptocurrency came from illegal sources like darknet markets, involving drugs, computer crimes, and identity theft. The service was also used by people distributing child sexual abuse material (CSAM), particularly through the infamous site Welcome to Video.

“At launch, Sterlingov publicized Bitcoin Fog as a tool for anonymizing bitcoin transactions and evading law enforcement. His site charged customers a fee for the service. Historically, the largest users of Bitcoin Fog were darknet markets such as Agora, Silk Road, Silk Road 2.0, Evolution, and AlphaBay. As the jury found, Sterlingov’s mixing and tumbling activity was an illegal money transmitting and money laundering service under federal law,” the DoJ said.

Throughout the trial, Sterlingov maintained his innocence, claiming he could not recall creating the Bitcoin Fog domain and doubting his involvement in its operation. However, the jury was not convinced by his defense or the argument presented by his lawyer that there was no direct evidence linking Sterlingov to the operation of Bitcoin Fog.

This case highlights the increased scrutiny crypto mixers have received from U.S. lawmakers and government agencies in recent years. Mixers have been criticized for complicating the tracing of money flows due to their ability to obscure the origins of cryptocurrencies.

The court also ordered the government to take over various assets previously seized by the authorities. This included more than 1,354 Bitcoin stored in a Bitcoin Fog wallet, along with $349,625 and other cryptocurrencies (Bitcoin, Ethereum, Monero, Stellar) from Kraken cryptocurrency exchange accounts that were seized. Sterlingov’s sentencing is scheduled for July 15.