Alleged operator of crypto mixer Bitcoin Fog arrested on money laundering charges

Legal • April 28, 2021, 4:30PM EDT
The Block

The alleged operator of crypto mixing service Bitcoin Fog, has been charged with money laundering and operating an illegal money transmission service, according to an affidavit from an Internal Revenue Service special agent Devon Beckett.

Bitcoin Fog operated between October 2011 and April 25, 2021. Supposedly, over 1.2 million BTC — or roughly $336 million — entered Bitcoin Fog, and $78 million from that were from known darknet markets. 

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Bitcoin Fog also allegedly sent 165 BTC, or about $24 million, to at least 51 darknet marketplaces, including Agora Market, Silk Road, AlphaBay Market and Evolution Market.

“There is probable cause to believe that the bitcoin transactions sent to and from Bitcoin Fog involved the proceeds of 'specified unlawful activity,' ... such as the narcotics distribution, identity theft and the sale of stolen personally identifiable information, and computer fraud and abuse, including the sale of computer hacking tools and exploits,” wrote Beckett in the affidavit. 

Because Bitcoin Fog charged 2% to 2.5% per transaction, alleged operator Roman Sterlingov took home $70 million- worth of BTC from the illegal transmissions.

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MK Manoylov has been a reporter for The Block since 2020 — joining just before bitcoin surpassed $20,000 for the first time. Since then, MK has written nearly 1,000 articles for the publication, covering any and all crypto news but with a penchant toward NFT, metaverse, web3 gaming, funding, crime, hack and crypto ecosystem stories. MK holds a graduate degree from New York University's Science, Health and Environmental Reporting Program (SHERP) and has also covered health topics for WebMD and Insider. You can follow MK on X @MManoylov and on LinkedIn.