Bitcoin Mist operator pleads guilty to money laundering, faces up to 50 years in prison

Following his arrest three years ago, a US federal district court jury found Roman Sterlilov, the operator of crypto-mining platform Bitcoin Fog, guilty of four counts of money laundering.

The founder of Bitcoin Fog faces up to 50 years in prison on all charges.

Sterlilov was sentenced.

According to a March 12 press release, the jury found Roman Sterlilov guilty of conspiracy and money laundering. The 35-year-old Russian-Swedish founder of Bitcoin Mist was found guilty of operating a money transmitter without a license and violating the DC Money Transfer Act.

Sterlilov's sentencing is set for July 15, 2024, but the first two counts each carry a maximum penalty of 20 years in prison, and the last two counts each carry a maximum penalty of five years in prison.

Bitcoin Fog, which ran for a decade between 2011 and 2021, served as a money laundering tool for criminals looking to hide their ill-gotten gains. The crypto mixer moved more than 1.2 million bitcoins at the time of its launch, which was roughly $400 million at the time and roughly $88 billion in BTC's current value.

According to the press release, the majority of bitcoins are obtained from dark web marketplaces linked to computer fraud, illegal drugs and identity theft. The mixer also served people who offered child sexual abuse material.

Meanwhile, Bitcoin Fog's biggest customers, according to the government, have been dark web marketplaces such as Silk Road, AlphaBay and Agora.

Commenting on the current development, United States Attorney for the District of Columbia Matthew Graves said:

“Darknet criminals need to know now that operations like Bitcoin Fog can provide anonymity to cryptocurrency transactions. This indictment shows that America can and will fight to use technology to commit crimes in cyberspace.”

In addition to the guilty verdict, the jury ordered the confiscation of assets previously seized by law enforcement, including 1,354 BTC in a Bitcoin fog wallet, $349,625 and other crypto assets held in accounts held on cryptocurrency exchange Kraken.

Sterlilov's lawyer wants to overturn the conviction

Meanwhile, Tor Ekland, the attorney representing Sterlilov, will appeal the jury's conviction. During Sterlilov's trial, Ekeland argued that there was no evidence that his client had created a Bitcoin fog.

Sterlilov, who was arrested in April 2021, testified that he does not remember creating the domain name for the crypto-mixer and doubts whether he was behind its creation.

Guilty verdict in USA v Sterlilov. We now appeal.

— Tor Ekeland (@TorEkelandPLLC) March 12, 2024

U.S. prosecutors brought Ilia Lichtenstein and Larry Harmon to testify at the trial. Liechtenstein in 2010 In 2022, he pleaded guilty to money laundering conspiracy in connection with the 2016 Bitfinex hacking and money laundering. Harmon, the owner of Bitcoin mixer Helix, pleaded guilty to money laundering in 2021.

Lichtenstein, who testified at the hearing, said he used mixers like Bitcoin Fog to hide the stolen money, but Sterlilov's crypto-mixing service was not the main money-laundering tool.

Crypto-mixing services are under intense scrutiny by US authorities, who believe these services can serve as a valuable tool for criminals. A popular crypto mixer, Tornado Cash, has been sanctioned by the US Treasury's Office of Foreign Assets Control (OFAC) in 2022.

Tornado Cash monetizes cybercrimes for malicious actors like the Lazarus Group. Developers Roman Semenov and Roman Storm face charges ranging from money laundering to sanctions violations. But Semenov is big now.