Crypto 'mixer' gets more than 12 years for money laundering

The founder of a cryptocurrency mixing service known as Bitcoin Fog was ordered to serve 12-and-a-half years for laundering tens of millions of dollars from darknet markets that sold illegal drugs.  

Roman Sterlingov, 36, was sentenced to 150 months Friday in Washington federal court by US District Judge Randolph Moss, who also ordered him to forfeit $395 million and his interest in a Bitcoin Fog wallet with Bitcoin valued at more than $103 million. Sterlingov, a Russian-Swedish national, was convicted by a jury in March on charges tied to operating what prosecutors said was one of the “largest and longest-running money laundering services.” 

Sterlingov provided a service that jumbled digital tokens to make it more difficult to find the source of proceeds from illegal activities. Prosecutors said Bitcoin Fog processed untraceable transactions for a decade, including some from known darknet markets. Sterlingov was convicted of conspiring to launder money, money laundering, and two charges related to running an unregistered money transmitting service.

“Roman Sterlingov laundered over $400 million in criminal proceeds through Bitcoin Fog, his cryptocurrency ‘mixing’ service that was open for business to criminals looking to hide dirty money,” Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in a statement. “Today’s sentencing underscores the Justice Department’s commitment to holding those who facilitate criminal activity fully accountable for their crimes.”

In court Friday, Sterlingov expressed remorse. “I am sorry for any harm that may have come from my actions,” he told the judge. “I’m fully committed to becoming a better person.”

Moss imposed a substantially lighter prison term than the 30 years requested by the government and the 50-year maximum in US sentencing guidelines. “A life sentence seems inconsistent with the level of culpability,” but the penalty should be harsh enough to deter others, especially in the crypto world where authorities have a hard time catching criminals, the judge said.

‘Staggering scale’

Prosecutors pushed for a stiff sentence because of the size and duration of the scheme. “This is criminal activity of a staggering scale over a prolonged period of time,” said Christopher Brown, a prosecutor in the case. The government also said he lied under oath during the trial when he denied operating Bitcoin Fog or deriving wealth from the mixing service. The defendant’s statements can’t “be reconciled with the jury’s verdict,” prosecutors wrote in their sentencing memo.

“He knew Bitcoin Fog was a service for people who have real problems with the law,” Brown said during the sentencing hearing Friday.

“The prosecution of Roman Sterlingov and the sentence imposed today should serve as a warning to cybercriminals,” the FBI’s Assistant Director in Charge David Sundberg said in a statement. “The FBI will not hesitate to use all tools at its disposal and will leverage our extensive partnerships to disrupt the cybercriminal ecosystem and the individuals who provide the key services that facilitate criminal activity.”

At trial, Sterlingov testified that he used Bitcoin Fog, but didn’t operate the service. His attorney, Tor Ekeland, said there were no eyewitness accounts or service logs that prove his client ran the service. Sterlingov’s defense lawyers told the judge he shouldn’t get more than seven and a half years in prison.  

The case is US v. Sterlingov, 21-cr-00399, US District Court, District of Columbia (Washington, DC).