The latest announcement from the US Department of Justice states that Roman Sterlingov, the founder of the cryptocurrency mixing service Bitcoin Fog, has been convicted of multiple charges including conspiracy to launder money after three years of arrest and trial. On the other hand, the criminal trial of the founder of Tornado Cash will take place in September this year.
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Founder of Bitcoin Fog convicted of money laundering
Prosecutor: Mixing platforms do not provide anonymity for criminal activities
Will Tornado Cash be treated similarly?
The Federal Bureau of Investigation (FBI) tweeted yesterday that Roman Sterlingov, the founder of the cryptocurrency mixing protocol Bitcoin Fog, was convicted by a US federal court on Tuesday for conspiracy to launder money, operating an unlicensed money transmitting business, and violating the District of Columbia Money Transmitters Act.
According to the content, Bitcoin Fog, operated by Sterlingov from 2011 to 2021, helped launder over 1.2 million bitcoins worth over $400 million, most of which came from criminal activities related to the dark web, including illegal drugs, cybercrime, identity theft, and child pornography.
Jim Lee, the Chief of Criminal Investigation at the Internal Revenue Service (IRS), stated that the evidence presented during the trial indicated a close connection between the defendant’s personal exchange account flow and Bitcoin Fog, demonstrating a continuous use of the platform to conceal the source of funds.
In response, Sterlingov admitted to using the service but denied being the administrator of the platform. However, the judge did not accept his defense and found him guilty of all four charges, ordering the seizure of 1,354 bitcoins held in the Bitcoin Fog wallet and nearly $350,000 worth of cryptocurrency in a Kraken account. The most serious money laundering charge could result in a maximum of 20 years of imprisonment, with the final sentencing scheduled for July 15.
This is one of the significant cases involving the conviction of cryptocurrency mixing services for money laundering, following the Bitfinex money laundering case and the case of Larry Dean Harmon’s dark web trading platform.
Matthew M. Graves, the prosecutor for the District of Columbia, emphasized that criminals should now know that platforms like Bitcoin Fog do not provide anonymity for their encrypted transactions. He added, “The United States has the ability and will combat criminal activities conducted through technology in cyberspace.”
Tor Ekeland, Sterlingov’s lawyer, stated that they will continue to appeal.
By the way, the trial of another founder of a cryptocurrency mixing protocol is scheduled for September this year. Tornado Cash, as an influential mixing service in the current cryptocurrency market, was sanctioned by the Office of Foreign Assets Control (OFAC) in August 2022, and its developers Roman Storm and Alexey Pertsev have been arrested on suspicion of money laundering.
It is reported that they have all pleaded not guilty, and whether the preliminary verdict in the Bitcoin Fog case will be used in the Tornado Cash case is of great interest.
A few days ago, entities such as Arbitrum DAO and fundraising platform GoFundMe suspended donations and funding for the legal expenses of Tornado Cash, expressing concerns about potential legal risks.
(Bitcoin fog
TornadoCash
Dark web
Money laundering
Criminal activities)