Bitcoin Fog founder convicted in $400m crypto laundering case

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The founding father of crypto mixing service Bitcoin Fog has been discovered responsible by a federal courtroom of laundering cash linked to illicit drug gross sales on the darkish internet.

On Tuesday, a deliberation that lasted roughly two days led the jury to seek out Roman Sterlingov liable for obscuring the origins of crypto transactions, thereby complicating efforts to hint the monetary proceeds from criminal endeavors. The prosecution argued that Bitcoin Fog had been instrumental in masking over $400 million in transactions, with $78 million straight tied to infamous darkish internet marketplaces.

Sterlingov’s conviction marks one other important victory in america’ intensified efforts to fight cryptocurrency-related legal actions. The collection of authorized actions additionally contains the notable conviction of FTX’s co-founder, Sam Bankman-Fried, and the most recent settlement with Binance. Sterlingov, holding twin Russian and Swiss citizenship, refuted claims of his involvement with Bitcoin Fog in the course of the trial.

Sterlingov now faces a most sentence of 20 years in jail on 4 costs of cash laundering, having already spent almost three years in detention.

All through the trial, which prolonged over a month, the prosecution demonstrated how investigators traced cryptocurrency transactions from dark web platforms by way of Bitcoin Fog. The trial additionally outlined a fancy process allegedly employed by Sterlingov over a decade in the past to register the Bitcoin Fog area identify.

Additional proof introduced by the prosecution prompt Sterlingov engaged in minor transactions from an account beneath his identify, purportedly to check Bitcoin Fog’s operations earlier than its 2011 launch. Sterlingov admitted to utilizing Bitcoin Fog however denied gathering any charges, opposite to the prosecution’s assertions.

Crypto laundering turns into widespread

Sterlingov’s case underscores the rising concern over cryptocurrency’s position in cash laundering, particularly by way of providers designed to anonymize transactions. A current report by Chainalysis for 2024 highlights a worrying development of elevated laundering actions through crypto mixers.

The report sheds gentle on the dominant position of transactions linked to sanctioned entities, accounting for 61.5% of all tracked illicit transactions, amounting to $14.9 billion in 2023. Many of those transactions contain cryptocurrency providers beneath sanctions by the U.S. Division of the Treasury’s Workplace of Overseas Property Management (OFAC) or are based mostly in sanctioned jurisdictions. 

Among the many important contributors to this quantity was the Russia-based alternate Garantex, which was sanctioned for laundering cash for ransomware attackers and different cyber criminals. The newest case once more highlights the advanced challenges in regulating cryptocurrency transactions globally.

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