Founder of Bitcoin Fog, a mixing protocol, convicted of money laundering, will Tornado Cash case be treated similarly?
The latest announcement from the U.S. Department of Justice states that Roman Sterlingov, the founder of the Bitcoin mixing service Bitcoin Fog, has been found guilty of multiple charges including conspiracy to commit money laundering after three years of arrest and trial. On the other hand, the criminal trial of the founder of Tornado Cash will take place in September this year.
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Founder of Bitcoin Fog sentenced for money laundering
Prosecutor: Mixing platforms do not provide anonymity for criminal activities
Will Tornado Cash be treated similarly?
The Federal Bureau of Investigation (FBI) tweeted yesterday that Roman Sterlingov, the founder of the Bitcoin mixing protocol Bitcoin Fog, was convicted on Tuesday by a U.S. district court for conspiracy to commit money laundering, operating an unlicensed money transmitting business, and violating the District of Columbia Money Transmitters Act.
According to the content, Bitcoin Fog, operated by Sterlingov from 2011 to 2021, assisted in laundering over 1.2 million bitcoins worth over $400 million, most of which came from criminal activities related to the dark web, including illegal drugs, cybercrime, identity theft, and child pornography.
Jim Lee, the Director of Criminal Investigation at the Internal Revenue Service (IRS), stated that the evidence presented during the trial indicated a close connection between the defendant’s personal exchange account flows and Bitcoin Fog, demonstrating a continued use of the platform to conceal the source of funds.
In response, Sterlingov admitted to using the service but claimed that he had never been an administrator of the platform. However, the judge did not seem convinced and found him guilty on all four charges, ordering the confiscation of 1,354 bitcoins held in the Bitcoin Fog wallet and nearly $350,000 worth of cryptocurrencies in a Kraken account.
It is reported that the most severe money laundering charge could result in a maximum sentence of 20 years, with the final sentencing scheduled for July 15.
This is one of the significant cases involving convictions for money laundering through cryptocurrency mixers, following the Bitfinex money laundering case and the Larry Dean Harmon dark web trading platform case.
Matthew M. Graves, the U.S. Attorney for the District of Columbia, emphasized that criminals should now understand that platforms like Bitcoin Fog do not provide anonymity for their encrypted transactions. He added, “The United States has the ability and will continue to combat criminal activity conducted through technology in cyberspace.”
In response, Sterlingov’s lawyer, Tor Ekeland, stated that they will continue to appeal.
By the way, the trial of the founder of another mixing protocol, Tornado Cash, is scheduled for September this year. As a prominent mixer in the current cryptocurrency market, Tornado Cash was sanctioned by OFAC in August 2022, and its developers, Roman Storm and Alexey Pertsev, have been successively apprehended on money laundering charges.
It is reported that they have all pleaded not guilty, and there is considerable attention on whether the preliminary judgment in the Bitcoin Fog case will be applied to the Tornado Cash case.
A few days ago, entities such as Arbitrum DAO and crowdfunding platform GoFundMe temporarily suspended donations and funding for the Tornado Cash lawsuit, expressing concerns about potential legal risks.
(Bitcoin fog, TornadoCash, dark web, money laundering, crime)
Further reading:
“Understanding Cryptocurrency” Starts with Decentralization! Industry Should Not Be Equated with Crime
UK Strengthens Cryptocurrency Regulations: Law Enforcement Agencies Can Freeze or Dispose of Illicit Cryptocurrency Assets without Convictions
