Roman Sterlingov, the founder of the cryptocurrency mixer Bitcoin Fog, is appealing against a potential 30-year prison sentence after his conviction on multiple charges, including money laundering.
His legal team submitted a filing on August 15 to the United States District Court for the District of Columbia, arguing that such a lengthy sentence is excessive and inconsistent with penalties in comparable cases.
Sterlingov was convicted in March on charges of money laundering, conspiracy, operating an unlicensed money transmitting business, and transmitting money without a license.
Prosecutors claim he operated Bitcoin Fog from 2011 to 2021, facilitating the laundering of approximately $400 million in Bitcoin connected to illicit activities such as drug trafficking, identity theft, and computer fraud.
Defense Arguments and Sentencing Concerns
Sterlingov's lawyers contend that the government's recommendation of a 20 to 30-year sentence is unjustified, pointing out that similar cases have resulted in lighter penalties.
They argue that the evidence against Sterlingov was largely circumstantial, as key evidence like the Bitcoin Fog server, server logs, private keys, or ledger was never presented in court.
The defense also emphasized Sterlingov's personal history, including his commitment to family and friends, as grounds for a reduced sentence, suggesting his involvement in Bitcoin Fog was more about aiding and abetting rather than direct operation.
Upcoming Legal Proceedings
Judge Randolph Moss, who was initially scheduled to sentence Sterlingov on August 21, has decided to first hear arguments regarding the government's forfeiture order. This order includes the seizure of assets such as 1,354 BTC in a Bitcoin Fog wallet, untouched since 2012, and a potential $395 million judgment.
Tornado Cash Sees Resurgence Amid Legal Scrutiny
While Sterlingov’s case unfolds, the crypto mixing protocol Tornado Cash has seen a resurgence, with deposits exceeding $1.8 billion in the first half of 2024, a 45% increase from the total deposited in 2023.
Despite being sanctioned by the US Treasury in August 2022 for its role in laundering over $455 million stolen by the North Korea-affiliated Lazarus Group, Tornado Cash remains popular, particularly among hackers involved in major thefts.
Challenges in Monitoring Tornado Cash
The decentralized nature of Tornado Cash makes it difficult for US authorities to monitor its usage effectively.
Recent reports indicate that significant amounts of stolen funds, including $76 million from the Poloniex exchange heist and $166 million from the HECO Bridge exploit, have been funneled through Tornado Cash this year.
Despite the sanctions leading to a 90% drop in monthly deposits initially, the protocol's usage has rebounded, reflecting ongoing challenges in curbing illicit activity in the crypto space.
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