Roman “Bitcoin Fog” Sterlingov arrested for laundering $336 million
Before launching the service, the admin used his real name on his MT Gox account to beta test the platform. His personal Google account was also used to store the steps to pay for the domain.
Public court documents have shown that federal agents in Los Angeles, California have arrested Roman Sterlingov on allegations of laundering nearly $336 million in bitcoin over 10 years.
The three charges against Mr. Sterlingov, who is both a Russian and Swedish citizen, stem from his involvement with bitcoin mixing service Bitcoin Fog: unlicensed money transmission, money laundering, and money transmission without a license.
Launched in 2011, Bitcoin Fog is one of the first Bitcoin “tumbler” or “mixer” services, which anonymize cryptocurrency payments. These services are particularly popular for not-so-legal activities found on darknet online markets.
The complaint, filed by the Internal Revenue Service, alleges that over 1.2 million Bitcoin, worth approximately $336 million at the time of the transactions, were sent through Mr. Sterlingov’s firm Bitcoin Fog.
Federal prosecutors believe Sterlingov took in around $8 million in BTC for his services, getting around a 2% fee per mix on Bitcoin Fog.
Bitcoin Fog could be found on Tor via an onion address. The service required mandatory registration (only username and password) and a minimum deposit of 0.01 BTC to use the platform.
Mr. Sterlingov was connected to the Bitcoin Fog domain and to Mt. Gox accounts via his Liberty Reserve account and IP addresses. Before launching the service, the admin used his real name on his MT Gox account to beta test the platform. His personal Google account was also used to store the steps to pay for the domain.
Special agent Devon Beckett stated: “Analysis of bitcoin transactions, financial records, Internet service provider records, email records, and additional investigative information, identifies Roman Sterlingov as the principal operator of Bitcoin Fog.”
“While the identity of a Bitcoin address owner is generally anonymous (unless the owner opts to make the information publicly available), law enforcement can often identify the owner of a particular Bitcoin address by analyzing the blockchain”, Mr. Beckett added in his affidavit.
Chainalysis co-founder Jonathan Levin told Wired: “This is yet another example of how investigators with the right tools can leverage the transparency of cryptocurrency to follow the flow of illicit funds. ”
According to the complaint, Mr. Sterlingov founded Bitcoin fog in 2011 under the pseudonym Akemashite Omedetou, who advertised on BitcoinTalk that his service “[mixes] up your bitcoins in our own pool with other users” and “can eliminate any chance of finding your payments and making it impossible to prove any connection between a deposit and a withdraw inside our service.”