Man Arrested in the US for Laundering Hundreds of Millions in Bitcoin
Law enforcement officers in the United States have arrested a man on suspicion of laundering hundreds of millions of dollars’ worth of Bitcoin (BTC) through a cryptocurrency mixing service.
What is a Crypto-Mixing Service?
A crypto-mixing service—also known as a cryptocurrency tumbler—obscures the original source of potentially identifiable or “tainted” cryptocurrency by jumbling it up with other funds in a single pool.
Arrest Warrant Executed in Los Angeles
An arrest warrant for Roman Sterlingov was successfully executed in Los Angeles, California, on April 27 and filed in the United States District Court for the District of Columbia on the same day. Sterlingov, a dual Russian and Swedish citizen, is accused of unlicensed money transmission, money laundering, and transmitting money without a license.
Bitcoin Fog Darknet Money-Laundering Service
Sterlingov was arrested by special agent to the Internal Revenue Service Devon Beckett, who had been investigating the Bitcoin Fog darknet money-laundering service allegedly operated by Sterlingov. Beckett describes how Bitcoin Fog’s administrator publicly advertised the organization’s cryptocurrency mixer service as a way to help users obfuscate the source of their Bitcoin.
Blockchain Analysis Confirms Transactions
Using blockchain analysis, law enforcement confirmed that over 1.2 million BTC valued at approximately $335,809.383 has been sent through the Bitcoin Fog site since it was established in October 2011. IRS-CI cyber-analysts determined that Bitcoin Fog received approximately 486,861.69 BTC valued at the time as approximately $54,897,316.44 directly from darknet markets.
Illegal Narcotics Trafficking
Historically, the largest senders of BTC through Bitcoin Fog have been darkness markets, such as Agora, Silk Road 2.0, Silk Road, Evolution, and AlphaBay, that primarily trafficked in illegal narcotics and other illegal goods.
Undercover Transactions Expose Money-Laundering
Through undercover transactions performed in September and November 2019, IRS special agents were able to determine that the crypto-tumbling service offered by Bitcoin Fog effectively broke the link in the blockchain between the source and ultimate destination of funds sent. A second undercover transaction revealed that Bitcoin Fog released funds to a user after being informed by that user that the money was the proceeds of illegal drug sales.
Identifying the Principal Operator
Analysis of Bitcoin transactions, financial records, internet service provider records, email records, and additional investigative information identified Sterlingov as the principal operator of Bitcoin Fog.
(Note: This article is for informational purposes only and does not constitute legal advice.)