The founder of Bitcoin Fog was sentenced to more than ten years in prison

A U.S. federal judge has sentenced Bitcoin Mist founder Roman Sterlilov to 12.5 years in prison for money laundering related to the dark market, the Justice Department announced.

Along with his prison term, Sterlilov will forfeit $395 million and more than $103 million worth of money in his Bitcoin Fog Wallet. This decision has sparked intense debate in the crypto community, particularly on issues of privacy and government regulation.

Privacy advocates responded to the Bitcoin Fog founder's statement and denial

Prosecutors initially sought a 30-year prison sentence, arguing that Sterlinov had perjured himself by denying his involvement with Bitcoin Fog. However, Sterlilov claimed in court that he was only a user and not an operator.

His lawyer, Thor Ekland, pointed out that there was no direct evidence. The lawyer argued that the officer had no eyewitnesses or courtroom notes to support his position on the mixed service.

Despite defense arguments, prosecutors alleged that Bitcoin Fog facilitated hundreds of millions of unverified transactions. Most of these transactions are said to be related to illegal activities on darknet marketplaces.

Between 2011 and 2021, Bitcoin Fog handled more than 1.2 million bitcoins, becoming the preferred service for individuals seeking to obscure transactions associated with illegal activities.

“Roman Sterlilov has paid the price today for running the longest-running bitcoin spoofing service on the dark web. The deep corners of the Internet have provided a home for all kinds of criminals, from drug dealers to identity thieves, to hoard hundreds of millions of dollars in ill-gotten gains.

Chief Deputy Assistant Attorney General Nicole M. Argentieri also said Sterlinov's actions allowed criminals to get away with a variety of crimes, including drug trafficking, identity theft and child exploitation. She emphasized that the Department of Justice is committed to holding criminals fully accountable.

The US government's scrutiny of privacy-focused protocols, including Tornado Cash, has raised questions among privacy advocates and industry insiders. Crypto analyst L0la L33tz strongly rejected the latest ruling. They say the Sterlilov case is an unfair step in the government's “war on financial privacy.”

“The government is now confiscating what little Bitcoin she has left, and the billions of dollars that Bitcoin Fog is said to have run are unknown. This entire case is a gross miscarriage of justice, and another stepping stone in the US government's war on financial privacy,” El33tz said.