Press Release

Defendant Laundered Hundreds of Millions in Illicit Drug and Other Proceeds

WASHINGTON - Roman Sterlingov, 36, a citizen of Russia and Sweden, was sentenced today to more than 12 years - or 150 months - in prison for operating a cryptocurrency mixer that laundered tens of millions of dollars for Darknet narcotics dealers and facilitated illegal conduct by other individuals who participated in a Darknet site for trafficking child sexual abuse material. A cryptocurrency mixer is a service that mixes potentially illegally derived cryptocurrency with others to obscure the trail back to the cryptocurrency's original source.

The sentence, handed down in U.S. District Court for the District of Columbia, was announced by U.S. Attorney Matthew M. Graves, Deputy Attorney General Lisa Monaco, Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department's Criminal Division, Chief Guy Fico of the Internal Revenue Service-Criminal Investigation (IRS-CI), and FBI Assistant Director in Charge David Sundberg of the Washington Field Office.

In addition to his term of imprisonment, Sterlingov was sentenced to pay a forfeiture money judgment in the amount of $395,563,025.39, and forfeiture of seized cryptocurrencies and monetary assets valued at approximately $1.76 million. In addition, Sterlingov was ordered to forfeit his interest in the Bitcoin Fog wallet, totaling approximately 1,345 bitcoin and currently valued at more than $103 million.

"As proven at trial, Roman Sterlingov created and used an online tool to process hundreds of millions in illegal transactions, enabling darknet drug dealers and those who sell child sexual abuse material, to operate," said U.S. Attorney Graves. "Today's sentence sends an unmistakable message: those who help criminals with online payments for their illegal activities will face serious penalties. This prosecution also provides more proof that we have the skilled investigators and talented prosecutors needed to hold those who operate these darknet sites accountable."

"Roman Sterlingov ran the longest-running bitcoin money laundering service on the darknet, and today he paid the price," said Deputy Attorney General Lisa Monaco. "In the deepest corners of the internet, he provided a home for criminals of all stripes, from drug traffickers to identity thieves, to store hundreds of millions of dollars in illicit proceeds. Today's sentence reflects the Department's determination to dismantle the criminal networks that enable criminal actors to flourish and ensure consequences for the criminals operating them."

"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," said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division. "Through his illicit money laundering operation, Sterlingov helped criminals launder proceeds of drug trafficking, computer crime, identity theft, and the sexual exploitation of children. Today's sentencing underscores the Justice Department's commitment to holding those who facilitate criminal activity fully accountable for their crimes. I am especially proud of the dedicated investigators and prosecutors who worked tirelessly to unmask and prosecute the Bitcoin Fog scheme."

"Clearly, Sterlingov's attempt to shroud his illicit activities in a cloak of anonymity ultimately failed against the sophisticated collaborative work of our Criminal Investigation (CI) special agents and partners," said Chief Guy Ficco of IRS-CI. "Today's significant prison term and hundreds of millions in financial sanctions against the defendant emphasizes the seriousness of this conviction and should serve as a stark notice that this type of criminal activity will not be tolerated."

"The prosecution of Roman Sterlingov and the sentence imposed today should serve as a warning to cybercriminals," said Assistant Director in Charge David Sundberg. "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."

Sterlingov was found guilty on March 12, 2024, of conspiracy, sting money laundering, operating an unlicensed money transmitting business, and violations of the D.C. Money Transmitters Act following a month-long jury trial. The jury also granted forfeiture to the government of several specific assets that law enforcement had previously seized, including over about 1,354 Bitcoin (BTC) held in a Bitcoin Fog wallet, as well as $349,625 and various cryptocurrencies (including Bitcoin, Ethereum, Monero, and Stellar) held in seized Kraken cryptocurrency exchange accounts.

According to the government's evidence, Sterlingov operated Bitcoin Fog from October 2011 to April 2021. Bitcoin Fog was a cryptocurrency "mixer," or "tumbler," and had gained notoriety as a money laundering service for criminals seeking to hide their illicit proceeds from law enforcement. Over the course of its decade-long operation, which stopped only when Sterlingov was arrested and detained, Bitcoin Fog moved well over 1.2 million Bitcoin (BTC) - valued at approximately nearly $400 million at the time of the transactions. The bulk of that cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer fraud and abuse activities, and identity theft. Sterlingov's service also served purveyors of child sexual abuse material (CSAM) through the notorious site Welcome to Video.

Sterlingov -- who used the monikers Akemashite Omedetou and Killdozer and Meth!, among others -- was fully aware that Bitcoin Fog would be used to launder Bitcoin from illegal vendors on the Darknet. As he noted succinctly about a month before creating Bitcoin Fog, Bitcoin and narcotics went hand in hand. "Also, like Silk Road, go ahead and accept payments in bitcoins; then, you will not be intimidated by even the U.S."

The defendant advertised the site as "for people who have real problems for the law and we provide them the best possible service, and highest possible anonymity." Those who had "real problems for the law" would mix "your bitcoins in our own pool with other users' Bitcoins, and get paid back to other accounts from our mixed pool."

At its launch, Sterlingov publicized Bitcoin Fog as a tool for anonymizing bitcoin transactions and evading law enforcement. His site charged customers a fee for the service. Historically, the largest users of Bitcoin Fog were darknet markets such as Agora, Silk Road, Silk Road 2.0, Evolution, and AlphaBay. As the jury found, Sterlingov's mixing and tumbling activity was an illegal money transmitting and money laundering service under federal law.

While the identity of a BTC address owner is generally anonymous (unless the owner opts to make the information publicly available), the evidence at trial demonstrated that law enforcement can identify the owner of a particular Bitcoin address by analyzing the blockchain. The analysis can also reveal additional addresses controlled by the same individual or entity. IRS-CI's analysis determined Bitcoin Fog received approximately 486,861.69 BTC, valued at about $54,897,316 at the time of the transactions, directly from darknet markets. Bitcoin Fog sent approximately 164,931.13 BTC (about $23,690,956 at the time of the transactions) directly to darknet markets. In sum, the anonymizer sent or received more than $78 million in transactions involving known darknet markets, counting only direct transactions.

Based on Bitcoin Fog's transaction activity over time, Sterlingov made millions in commissions from Bitcoin Fog transactions. Investigators obtained records of Sterlingov's true-name accounts at several cryptocurrency exchanges. Analysis of those accounts revealed the vast majority of cryptocurrency deposited into Sterlingov's accounts was originally sourced and traced back to Bitcoin clusters associated with Bitcoin Fog.

Under U.S. law, it is a crime to conspire to commit money laundering, that is, to conduct financial transactions with proceeds from unlawful activity designed to conceal the nature, location, source, ownership, or control of such proceeds. It is also a crime to conduct or attempt to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, with the intent to conceal the nature, location, source, ownership, or control of such property. It is also a crime to operate a money transmitting businesses without obtaining an appropriate money transmitting license in the state in which the service operates, or with FinCEN. The District of Columbia also criminalizes similar unlicensed activity.

Sterlingov was arrested April 27, 2021, at Los Angeles International Airport and has remained detained since that time.

This case is being investigated by the IRS-CI District of Columbia Cyber Crime Unit and the FBI Washington Field Office. The Justice Department's Office of International Affairs and FBI's Virtual Asset Unit provided invaluable assistance. Additional assistance was provided by Japanese, Swedish, Danish, Romanian, and UK authorities, as well as Europol.

The case is being prosecuted by Assistant U.S. Attorney Christopher B. Brown for the District of Columbia and Trial Attorneys Jeff Pearlman and C. Alden Pelker of the Criminal Division's Computer Crime and Intellectual Property Section (CCIPS). Pelker and Brown are members of CCIPS' National Cryptocurrency Enforcement Team (NCET). Paralegal Specialists Angela De Falco and Divya Ramjee provided valuable assistance.

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Updated November 12, 2024