Prosecutors Move to Seize Assets in Bitcoin Fog Case

News | June 21, 2024 By:

On Friday, June 7, 2024, the US Government filed a motion for forfeiture of property in the case of USA v. Roman Sterlingov in the US District Court for the District of Columbia.

Sterlingov has been charged with money laundering conspiracy, money laundering, operating an unlicensed money transmitting business, and money transmission without a license in relation to his alleged operation of a Bitcoin mixer known as Bitcoin Fog.

As part of sentencing, prosecutors are seeking forfeiture of assets deemed to have been involved in the crimes, as required by law.

The motion outlines the standard legal process for determining forfeitable property after conviction. This includes what can be subject to forfeiture under the relevant statutes, establishing a connection between the property and the offenses, determining a money judgment amount, and potentially seizing substitute assets if direct proceeds are unavailable.

In this case, the offenses involved Sterlingov operating Bitcoin Fog, which allowed users to anonymize cryptocurrency transactions, primarily in the form of bitcoin, by mixing different users’ funds together. Over 1.2 million bitcoin were deposited into Bitcoin Fog over time, worth an estimated $395 million at current values.

Prosecutors argue that because Bitcoin Fog functioned by pooling all deposited funds before redistributing them, all funds passing through the service facilitated money laundering and unlicensed money-transmitting operations. As such, they are seeking a forfeiture money judgment for the full $395 million value.

A jury already determined in a separate phase of the trial that six specific holdings connected to Sterlingov, including bitcoin, ether, and monetary assets, represented illicit proceeds or were directly involved in the crimes. Prosecutors are requesting the court finalize an order forfeiting these items as required.

Additionally, they want the court to seize over 10 bitcoin recovered from Sterlingov’s cryptocurrency wallets as substitute assets since the direct proceeds will not fully cover the money judgment amount. Any assets forfeited or seized will go towards satisfying the $395 million judgment against Sterlingov.

The motion notes that finalizing the forfeiture order now allows parties to suggest modifications before Sterlingov’s sentencing.

Please contact BlockTribune for access to a copy of this filing.