Creator of Crypto Mixer ‘Bitcoin Fog’ Gets 12 1/2 Years In Prison

The laminitis of cryptocurrency mixing work Bitcoin Fog was sentenced connected Friday to 150 months successful prison for operating what prosecutors described arsenic 1 of the “largest and longest-running wealth laundering services.”

According to prosecutors, the work was utilized to launder implicit $400 cardinal successful transgression proceeds since being created successful 2011. The lawsuit was 1 that challenged the thought that cryptocurrencies, due to the fact that they are not fiat currency, tin run extracurricular of mean ineligible frameworks. As blockchain investigation and crypto outgo tracing techniques person matured and go cardinal to transgression investigations, it was a substance of clip earlier the services cardinal to scrambling the origins of wealth would travel nether scrutiny themselves. Besides wealth laundering, mixers tin beryllium charged with moving unlicensed wealth transmitting businesses. Basically, allowing radical to nonstop and person wealth without checking their identities.

In layman’s terms, cryptocurrency mixers are large pools wherever crypto users deposit their tokens, aft which the cryptocurrency gets shuffled, past redistributed backmost to users adjacent to the archetypal magnitude they enactment in, minus a work interest taken by the mixer. The thought is to forestall forensic accountants from pursuing that money’s trail, though proponents of the services accidental they conscionable assistance individuals support their privacy.

As portion of sentencing, Sterlingov, 36, was ordered to forfeit his involvement successful a Bitcoin Fog wallet with containing Bitcoin valued astatine much than $103 million. Sterlingov has said that his crypto holdings came not from Bitcoin Fog but from aboriginal concern successful cryptocurrencies. He did concede that helium utilized the work arsenic a idiosyncratic seeking privacy, and suggested those transactions led prosecutors to wrongly necktie him to the service’s operations.

Sterlingov maintained passim proceedings that helium ne'er operated Bitcoin Fog. After sentencing, however, Sterlingov expressed remorse. “I americium atrocious for immoderate harm that whitethorn person travel from my actions,” helium told the judge. “I’m afloat committed to becoming a amended person.”

The authorities tied Sterlingov to the work by showing a way of fiscal transactions from 2011 linking him to payments made to registry the Bitcoinfog.com domain. Bitcoin Fog operated connected the acheronian web, but Bitcoinfog.com advertised however to find the site. Sterlingov said successful tribunal that helium worked successful 2011 arsenic a web decorator for a Swedish selling company, implying helium mightiness person made the tract for a client. But helium besides said helium couldn’t retrieve for definite arsenic it was truthful agelong ago.

WIRED backmost successful 2022 explained much of the government’s evidence:

The funds to wage for that domain traveled done respective accounts and were yet exchanged from Bitcoin for the now-defunct integer currency Liberty Reserve, according to prosecutors. But the IRS says IP addresses, blockchain data, and telephone numbers linked with the assorted accounts each link the payments to Sterlingov. A Russian-language papers successful Sterlingov’s Google Account besides described a method for obfuscating payments akin to the 1 he’s accused of utilizing for that domain registration.

Prosecutors concluded, and the assemblage agreed, that contempt a deficiency of work logs oregon different grounds linking Sterlingov to the operations of Bitcoin Fog, the overwhelming grounds supported it beyond a tenable doubt. The defendant’s statements can’t “be reconciled with the jury’s verdict,” prosecutors wrote successful their sentencing memo.

The co-founder of different crypto mixer, Tornado Cash, was sentenced successful May to 64 months successful prison aft being recovered blameworthy by a Dutch tribunal of laundering implicit $1.2 billion.