On 8 November 2024, the United States Department of Justice (DOJ) secured a significant sentence in a landmark case against Roman Sterlingov, a dual Russian-Swedish national, who operated Bitcoin Fog, the longest-running cryptocurrency “mixer” on the darknet. Sentenced to twelve years and six months in federal prison by the District Court of the District of Columbia, Sterlingov’s case marks one of the most prominent prosecutions for money laundering in the digital asset space. The court’s order also included a substantial forfeiture of over $395 million in illicit proceeds, underscoring the judiciary’s intent to dismantle the networks supporting criminal activities on the darknet.
Roman Sterlingov’s Bitcoin Fog service, launched in 2011, operated as a cryptocurrency “mixer,” or “tumbler,” designed to obfuscate the source of cryptocurrency transactions. Bitcoin Fog became a go-to tool for criminals seeking anonymity, helping them “mix” illicitly obtained bitcoin with legitimate funds, making it virtually untraceable. Over its ten-year lifespan, Bitcoin Fog processed more than 1.2 million bitcoin transactions, valued at an estimated $400 million when the transactions were completed. Most of these transactions involved proceeds from darknet marketplaces, including activities such as illegal drug sales, identity theft, computer crimes, and distribution of child sexual abuse material.
In March 2024, following a thorough investigation by the United States Department of Justice, the Internal Revenue Service Criminal Investigation (IRS-CI), and the Federal Bureau of Investigation (FBI), Sterlingov was found guilty of multiple offences. After a month-long trial, the jury convicted him of:
- Money Laundering Conspiracy
- Money Laundering
- Operating an Unlicensed Money Transmitting Business
- Money Transmission Without a License
These charges, specific to the jurisdiction of the United States, are violations of the federal Money Laundering Control Act and 18 U.S. Code Section 1960, which prohibits operating unlicensed money transmitting businesses. The legal proceedings, conducted by the United States District Court for the District of Columbia, represent a critical enforcement of U.S. federal laws governing cryptocurrency transactions and financial crimes.
In addition to his twelve-year and six-month prison term, Sterlingov faced severe financial penalties. The court ordered a forfeiture judgment amounting to $395,563,025.39, along with the seizure of additional cryptocurrencies and monetary assets valued at approximately $1.76 million. Sterlingov was further required to forfeit his interest in the Bitcoin Fog wallet, which held 1,345 bitcoin currently valued at over $103 million. These extensive penalties reflect the court’s intent to recoup the proceeds generated through Bitcoin Fog’s facilitation of criminal activities.
Several high-ranking officials from the DOJ and other agencies involved in the case provided statements highlighting the importance of the sentencing. Deputy Attorney General Lisa Monaco underscored the significance of this outcome, stating, “Roman Sterlingov ran the longest-running bitcoin money laundering service on the darknet, and today he paid the price. In the deepest corners of the internet, he provided a home for criminals of all stripes… Today’s sentence reflects the Department’s determination to dismantle the criminal networks that enable criminal actors to flourish and ensure consequences for the criminals operating them.”
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the DOJ’s Criminal Division, further commented, “Through his illicit money laundering operation, Sterlingov helped criminals launder proceeds of drug trafficking, computer crime, identity theft, and the sexual exploitation of children. Today’s sentencing underscores the Justice Department’s commitment to holding those who facilitate criminal activity fully accountable.”
U.S. Attorney Matthew M. Graves for the District of Columbia stated that Sterlingov’s conviction “sends an unmistakable message: those who help criminals with online payments for their illegal activities will face serious penalties.” Chief Guy Ficco of IRS-CI and Assistant Director in Charge David Sundberg of the FBI echoed these sentiments, recognising the collaborative efforts that brought Sterlingov to justice.
The conviction was achieved through an extensive international and domestic collaboration involving numerous agencies. The IRS-CI’s District of Columbia Cyber Crime Unit and the FBI’s Washington Field Office spearheaded the investigation, with critical support from the DOJ’s Office of International Affairs and the FBI’s Virtual Asset Unit. Additionally, authorities from Japan, Sweden, Denmark, Romania, the United Kingdom, and Europol provided invaluable assistance, illustrating the global reach and impact of the case.
The DOJ’s prosecution team included Trial Attorneys Jeff Pearlman and C. Alden Pelker from the Computer Crime and Intellectual Property Section (CCIPS) and Special Assistant U.S. Attorney Christopher B. Brown for the District of Columbia. Former and current CCIPS Paralegal Specialists also played crucial roles in managing the case’s complexities.
The Sterlingov case sets a powerful precedent for regulating cryptocurrency-based money laundering, particularly in the expanding darknet economy. It underscores that even services operating with high levels of anonymity are within reach of law enforcement’s advanced investigative techniques. By imposing severe criminal and financial penalties, the court has highlighted the consequences of facilitating illicit activities through cryptocurrency services and has signalled the potential consequences for those who operate similar “mixing” platforms.
(Source: https://www.justice.gov/opa/pr/bitcoin-fog-operator-sentenced-money-laundering-conspiracy)
