Roman Sterlingov 32, the alleged owner of Bitcoin Fog, the “longest-running bitcoin money-laundering service on the darknet,” has been arrested in Los Angeles.
The United States Department of Justice, say that he has operated Bitcoin Fog since 2011. They alleged that during its operation, Bitcoin Fog moved 1.2 million Bitcoins worth approximately $335 million. This is the value at the time of transactions.
The bulk of this cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer fraud and abuse activities, and identity theft.
United State Department of Justice
Cyber analysts at IRS-CI identified direct deposits into Bitcoin Fog Mixer from 35 dark web markets. These are the biggest markets and the deposit values from these dark web markets:
- Agora Market – 41,966.87 Bitcoin ($14,398,754.73)
- Silk Road Market 2.0 – 22,863.74 Bitcoin ($12,518,636.97)
- Silk Road Market – 377,102.74 Bitocin ($9,556,159.49)
- Evolution Market – 11,100.79 Bitcoin ($3,199,542.15)
- AlphaBay Market – 5,442.86 Bitcoin ($2,907,508.67)
According to a Criminal Complaint in the District Of Columbia District Court, after an analysis of bitcoin transactions, financial records, ISP records, e-mail records, and additional investigative information, Roman Sterlingov was identified as the operator of Bitcoin Fog.
At the beginning of the investigation, investigators with the Internal Revenue Service-Criminal Investigation (IRS-CI) connected Bitcoin Fog with the Hotmail e-mail address [email protected].
This email had An account on the BitcoinTalk.org forum which had announced the launch of Bitcoin Fog (BitcoinTalk.org announcement). The person who owned that account signed up with the above Hotmail address and the name “Akemashite Omedetou.” Records obtained from Microsoft showed that [email protected] was created on October 7, 2011, this used an apparent fake name via a VPN. The Akemashite Omedetou account on BitcoinTalk.org had details about the Bitcoin Fog service.
On october 25, 2011, Bitcoinfog.com was registered through Highhosting.net. WhoIs records showed that the domain was registered to an “Akemashite Omedetou” who had the email address [email protected]. Records from Highhosting.net service showed that Akemashite Omedetou used a Liberty Reserve account to pay for the domain.
The Liberty Reserve records showed that the account was registered to [email protected]. Investigators were able to review account activity associated with the Liberty Reserve account and they linked Sterlingov to “a series of layered transactions through multiple payment platforms.”
Investigators were able to connect Sterlingov to the liberty Reserve and Mt. Gox accounts that paid for the domain name. They analyzed the IP addresses used to access the Liberty Reserve and Mt. Gox accounts. This analysis showed that Sterlingov was the owner of these accounts, according to IRS-CI Special Agent Devon Beckett.
On November 24, 2011, a user with the IP address 212.117.160.123 logged into Mt. Gox Account 2, Mt. Gox Account 3, and Liberty Reserve Account 1, and another Liberty Reserve account registered to Sterlingov (Liberty Reserve Account 2).
This chart shows how Sterlingov layered the transactions before paying for the Bitcoin Fog domain name.
U.S. law enforcement issued an arrest warrant for Sterlingov and arrested him on April 27, 2021, at the Los Angeles International Airport. Sterlingov is facing charges for money laundering, operating an unlicensed money transmitting business, and money transmission without a license in the District of Columbia.