Bitcoin Fog Crypto Mixer Found Guilty of Money Laundering, Jury Finds

Roman Sterlingov, the founder of a $400 million crypto-mixing service called Bitcoin Fog, has been convicted of money laundering in a United State District Court on Tuesday. Other charges include money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act. CoinTelegraph reports: Sterlingov, however, had argued throughout the trial that he was only a user of the service, and not its operator. His attorney, Tok Ekeland said in a March 12 X post that his team will appeal the verdict. According to evidence presented at the trial, Sterlingov operated Bitcoin Fog from October 2011 to April 2021, which acted as a money laundering service for "criminals seeking to hide their illicit proceeds from law enforcement."

The service moved over 1.2 million Bitcoin over the decade-long operation -- worth $400 million at the time of the transactions -- with the bulk of cryptocurrency coming from darknet marketplaces tied to narcotics, computer fraud abuse and identity theft, the government said. Bitcoin Fog also served distributors of child sexual abuse material. Evidence used to convict Sterlingov found that the "vast majority" of crypto deposited to his crypto exchange accounts came from "Bitcoin clusters" associated with Bitcoin Fog. "Evidence presented at trial clearly showed that the defendant laundered hundreds of millions of illicit funds from the dark web through Bitcoin Fog in an attempt to conceal the origin of those funds," said Internal Revenue Service (IRS) Criminal Investigation Chief Jim Lee.

Legitimate users

[alvinrod]

Who would be the legitimate users of this? Laundering only works if it comes out looking clean and there's enough clean to cover up the dirty. Bitcoin isn't completely anonymous, hence the desire for a service like this. But what person who's not into some kind of illicit activity would use this service? Why potentially have one of your future Bitcoin transactions trace to something potentially heinous that will draw more attention? Even if you're a criminal, why take the chance of putting some agency on your tracks because your Bitcoin was commingled with an even worse criminal they were looking for?

Re:

[timeOday]

For that matter, is "mixing" not just a synonym for "laundering"?

Re:

[alvinrod]

If you're only mixing with other ill gotten gains, what are you really mixing? The term laundering comes from the notion of taking your dirty clothes to a laundry to have them cleaned. Same as your dirty money. If they just mixed your clothes around with other dirty garments and spread the dirt around, what's the point? Does your dress look nicer with someone else's dirt on it?

Re: Legitimate users

[guruevi]

There is this urban myth that most money has coke on it, and the higher the bill, the more coke. That may or may not be true but that doesnâ(TM)t make the money any less valuable.

Re:

[itsme1234]

This is how Tor works and it has its users and uses.

Re:

[ceoyoyo]

I think the standard laundering uses online gambling sites and exchanges. The pure mixers rely on the idea that an outgoing transaction can be associated with dirty money via the mixer, but *what* dirty money is obscured.

Generally it's not enough to know that you commited a crime. You have to prove you commited a particular crime.

Re:

[FuzzMaster]

Now that the centralized mixers are blacklisted, they are fading into the obscurity. But decentralized N to M transactions are common [mempool.space] on the bitcoin network. They have been use regularly since the protocol added support over a decade ago.

So, more typical manipulation

[nocoiner]

Bitcoin is not going anywhere, except over $100,000 by April due to the halving.

So, more of the typical manipulation then. Check

"Roman Sterlings"

[cstacy]

"Roman Sterlings" LOL
I worked for a phone sex company once; the customer service manager's name was "Rod Steele".

What it says on the tin

[Mozai]

Isn't a crypto-mixer explicitly for money-laundering? This sounds like charging a reservoir for the act of holding water.

Wikipedia: "A cryptocurrency tumbler or cryptocurrency mixing service is a service that mixes potentially identifiable or "tainted" cryptocurrency funds with others, so as to obscure the trail back to the fund's original source."