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Bitcoin mixer operator arrested in US for alleged money laundering

United States federal agents arrested Roman Sterlingov, who is facing charges related to his alleged involvement in the Bitcoin Fog mixer. This individual is accused of money laundering and unlicensed money transmission. Around USD 336 million would have passed through this platform throughout its 10 years of existence.

The arrest of this Russian and Swedish citizen occurred yesterday, April 27, in the city of Los Angeles, California, as recorded in the corresponding record, issued by the Court of the District of Columbia.

As described in another document of the aforementioned judicial entity, the arrest was achieved after an extensive investigation led by the Internal Revenue Service (IRS). Through the analysis of the blockchain, Internet provider records, financial records and emails, among other elements, it would have reached Identify Sterlingov.

The detainee’s earnings, obtained by charging commissions for the use of the mixer, would reach USD 8 million , according to the IRS, which took into account the price of bitcoin (BTC) at the time of each transaction.

According to the I RS, the analysis of the Bitcoin blockchain was key in the investigation

The investigation report, written by IRS agent Devon A. Beckett, details that the commercial service of blockchain analytics companies was used. “These companies create large databases that group transactions into groups through the analysis of data underlying virtual currency transactions », explains the agent.

Also, the IRS’s own analysis would have been able to determine the origin of the funds that arrived at Bitcoin Fog and to which addresses the mixed BTCs were sent. At least 51 markets of the darknet are identified, including Agora Market, Silk Road, Evoluion Market and AlphaBay.

Bitcoin mixer operator arrested in US for alleged money laundering Bitcoin mixer operator arrested in US for alleged money laundering
Bitcoin Fog would have been used to send BTC to at least 51 markets from the darknet. Source: courtlistener.com

«According to my training and experience, including experience in other investigations of the darknet , markets of the darknet exist primarily for the trafficking of illegal narcotics and other illegal goods and services, “writes Beckett, who says” he is familiar with each of the markets in the darknet listed in the tables above ».

On the sole basis of their« training and experience », In the report, the broker speculates that the trading operations in those markets, with Bitcoin Fog as the intermediary, constituted “specified illegal activities”. Among them, he mentions the distribution of narcotics, identity theft, sale of stolen personal information and sale of tools for computer hacking.

It was also the analysis of the blockchain and other elements that, according to the official report, allowed the identification of Sterlingov , as the operator of Bitcoin Fog. The detainee, on September 29, 2011 opened an account on the Mt. Gox exchange using his real name. From that track, by analyzing transactions and coincidences In financial statements, it was determined that it was he who registered the domain of the mixer, although he tried to keep that operation anonymous.

According to the report, Sterlingov also It was registered in several centralized exchanges with its true data. By following the movements of coins from several of these exchanges, the relationship with Bitcoin Fog could be traced.

Grounds for the arrest of Sterlingov

The agent concludes with the mention of the crimes that the Bitcoin Frog operator, allegedly would have committed.

«With Based on my training and experience, I am aware of that the Bank Secrecy Law requires that anyone who owns or controls a money transmission company register with the Secretary of the Treasury, “says Beckett. It adds that neither Sterlingov nor Bitcoin Fog had this registration.

The report adds that those who engage in the “business of transmitting money” without having an enabling license commit a “serious crime” . According to the IRS, operations with BTC, being “securities that substitute currency”, are considered money transfers.

Finally, it explains that “bitcoin mixers are considered MSB according to the federal law”. This is the acronym, in English, for “money service business.” For this reason, FinCEN regulations apply to this task. These regulations include identity verification of clients and compliance with anti-money laundering policies.

Based on these arguments, Beckett concludes that the detainee’s actions “probably” constitute crimes classified in the US Federal Criminal Code.

There are doubts about the official version of the facts

As stated, the IRS credits the analysis of the Bitcoin blockchain for allowing this investigation. On the subject, Taylor Monahan, founder and CEO of MyCrypto, spoke. The businesswoman agrees with the IRS that “bitcoin is not private and can be tracked.”

Taylor Mohanan, CEO of MyCrypto, rejects the official version of the investigation and maintains that the identification of the operator was achieved by leaking information from companies. Source: ChronoLogic / youtube.com

Anyway, he argues that “the tracking of BTC transactions on the blockchain played a null role in tracking and confirmation of the alleged identification of the Bitcoin Fog operator. According to her, the Government (and media such as Wired that replicated the official version) are promoting the narrative that bitcoin is not anonymous, “which is true but irrelevant here.”

Monahan mentions that the The identification was mainly due to sources from private companies, such as Mt. Gox, or the company that sold the domain to Sterlingov or the exchanges he used.

“If information was obtained because the company carried out money laundering, can the information be used against an individual client of the company, who sells drugs?”, The executive asks.

Also, the CEO of MyCrypto joked that “anyone who knew about Bitcoin before 2013 is a villain in the eyes of the IRS.”

Bitcoin mixers: in the government’s sights, although the FBI uses them

The actions of the US Government c Against bitcoin mixer operators is not new. For example, in 2020, as reported by CryptoNews, Larry Harmon, founder and operator of the mixers Helix and Coin Ninja, received a fine of USD 60 million. The financial crimes authority described their action as “the first penalty to a mixing service for violating anti-money laundering laws.”

According to an investigation by the Chainalysis company, less than 11% of the ‘Mixed coins’ (which went through a mixer) were stolen or used in the markets of the darknet . This signature suggests that most Bitcoin mixers are used, not for illegal activity, but for personal privacy reasons.

Even the The US Federal Bureau of Investigation (FBI) appears to benefit from the services of the mixers. According to a report by independent researcher Joshua Davis, this state entity uses mixers when recovering stolen bitcoins. According to the author, this “makes it very difficult for other government agencies to audit the FBI when they take possession of illicit funds.”

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Sandra Loyd
Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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