Roman Sterlingov, the founder of Bitcoin Fog who holds dual citizenship in Sweden and Russia, has been held against criminal charges by the FBI and IRS CI special agents on April 27. As per reports, Bitcoin Fog is a cryptocurrency site founded by Sterlingov under the pseudonym ‘Akemashite Omedetou,’ a Japanese phrase meaning “Happy New Year.”
To everyone’s surprise, Bitcoin Fog became a crypto fraud that moved over 1.2 million worth of Bitcoins at about $335 million over the past 10 years as per the criminal complaint lodged in the District of Columbia. Soon after the fraud was unveiled by the FBI special agents, people started calling it a cryptocurrency “mixer” or “tumbler” to conceal the source of funds. According to reports, the bulk of Bitcoins were sourced from the darknet attached to computer fraud, abusive activities like identity theft, and illegal narcotics, and the primary focus of Bitcoin Fog was to help users conceal these illegal sources of funds.
But as it is said that truth finds its way, the investigators traced Bitcoin Fog using the same tool that Sterlingov thought of installing in his site to make huge profits. According to the ‘Statement of Facts’ lodged in the District Court, Sterlingov allegedly used the now-defunct digital currency to pay for the website’s (Bitcoin Fog) domain. The statement shows a list of blockchain transactions that identified Sterlingov’s purchase of that defunct cryptocurrency with Bitcoin. By tracing those blockchain transactions, investigators found out the house address and contact number of Sterlingov along with his Google account that he had used to conceal Bitcoin payments. However, ‘The Statement of Facts’ revealed all the unscrupulous methods Sterlingov used to buy the Bitcoin Fog domain.
Sterlingov’s arrest is a classic example of how well the Europol, Swedish and Russian law enforcement special agencies perform their duties in collaboration with the IRC-CI for combatting crypto crimes. However, this is not the first time that the Department of Justice, under Criminal Division’s Computer Crime and Intellectual Property Section, unveiled cryptocurrency mixer operations. A case, the ‘United States v. Harmon,’ was lodged in the District of Columbia, where the defendant Harmon was similarly prosecuted for his active participation in another Bitcoin mixer named “Helix” that sent over $300 million worth of Bitcoin to nominated recipients.
Both Sterlingov and Harmon were charged with the following offenses for violating the sections:
- 18 U.S.C. & 1960(b)(1)(A), which held them guilty for operating a money transmitting “Mixer” business without a legitimate license in the District of Columbia.
- 18 U.S.C. & 1960(b)(1)(B), which held them guilty for not being able to comply with the registration procedures of the BSA or the Bank Secrecy Act (“BSA”) for executing such a money transmitting business.
- By engaging in the money transmission business without a license, violating the MTA (Money Transmitters Act) of the District of Columbia.
