Bitcoin Fog Founder Sentenced To 12.5 Years for $400M Crypto Laundering Scheme

Bitcoin Fog founder Roman Sterlingov has been sentenced to 12.5 years in prison for operating a major cryptocurrency mixing service that laundered over $400 million in criminal proceeds.

The Washington federal court ruling was handed down by U.S. District Judge Randolph Moss, who also ordered the forfeiture of $395 million in assets, including seized cryptocurrency and Sterlingov’s interest in a Bitcoin wallet with over $103 million in Bitcoin.

Bitcoin Fog Founder Sentenced To 12.5 Years

Roman Sterlingov, a Russian-Swiss national, was convicted of multiple charges related to operating Bitcoin Fog, a cryptocurrency “mixer” that obscured the origins of digital currency transactions. The prosecution stated that Bitcoin Fog was a convenient way for criminals to launder the money obtained from criminal activities, including those related to narcotics on the darknet markets.

After a jury trial in March, Sterlingov was found guilty of conspiring to launder money, money laundering, and operating an unregistered money transmitting business.

Bitcoin Fog allowed users to combine or “mix” digital assets, making it harder to trace individual transactions. Prosecutors said that Sterlingov’s service functioned for approximately ten years and had aimed to enable untraceable transactions to support money laundering activities on an extensive scale.

Principal Deputy Assistant Attorney General Nicole M. Argentieri said that Roman Sterlingov “laundered over $400 million in criminal proceeds through Bitcoin Fog” and noted that the sentence demonstrates the Justice Department’s efforts to prosecute those who facilitate criminal conduct.

Judge Considers Deterrence in Sentencing

Judge Randolph Moss imposed a 12.5-year sentence, which was substantially less than the 30 years requested by the prosecution for the Bitcoin Fog founder. Prosecutors had argued for a severe penalty due to the prolonged and extensive nature of the scheme. “This is criminal activity of a staggering scale over a prolonged period of time,” said prosecutor Christopher Brown.

Nonetheless, Judge Moss said that a life sentence is excessive given the offense, although he emphasized the need for a significant deterrent in the cryptocurrency sector given that it is often difficult to follow the funds.

Roman Sterlingov said during the sentencing hearing, “I am sorry for any harm that may have come from my actions.” The defense had requested the judge to impose a maximum of 7.5 years saying there was no direct proof of Sterlingov contributing to the running of the Bitcoin Fog. Concurrently, Sterlingov’s attorney, Tor Ekeland, argued that there were no service logs or eyewitness statements that would have placed his client in control of the mixing service.

Recent Sentences In The Crypto Industry

The sentencing of Sterlingov comes amid scrutiny of the crypto industry, as other high-profile cases involving fraud and money laundering unfold.

Recently, Caroline Ellison, former CEO of Alameda Research, received a two-year prison sentence for her role in the FTX fraud, which defrauded investors out of billions.

In that case, key witnesses, including Ellison and former FTX engineer Nishad Singh, received lighter sentences or avoided prison time by cooperating with prosecutors against FTX founder Sam Bankman-Fried.