Jury Finds Mastermind Behind Bitcoin Fog Guilty of Laundering Millions

The conviction of Roman Sterlingov for laundering $400+ million through Bitcoin Fog is a clear indicator that money laundering is still an issue in the crypto space, but the UK is working hard on streamlining its AML efforts.

Roman Sterlingov, the founder of Bitcoin Fog, has been convicted by a U.S. District Court for laundering more than $400 million between 2011 and 2021. Despite maintaining his innocence and planning to appeal, evidence linking his accounts to Bitcoin Fog convinced the jury of his guilt. The UK is updating its crypto asset regulatory framework to streamline anti-money laundering efforts and reduce regulatory burdens, proposing changes to bring crypto asset service providers under Financial Conduct Authority (FCA) supervision. Meanwhile, OKX hit a major milestone by receiving in-principle approval for a Major Payment Institution license in Singapore.

Guilty as Charged

Roman Sterlingov, the 35-year-old founder of Bitcoin Fog, was convicted on charges of money laundering and operating an unlicensed money-transmitting business by a United States District Court on Tuesday. Sterlingov's conviction is based on his involvement with Bitcoin Fog, a service that is implicated in laundering more than $400 million through 1.2 million Bitcoin transactions from 2011 to 2021. The service mainly catered to criminals looking to hide the origins of their illicit proceeds from activities like narcotics trade, computer fraud, identity theft, and distributing child sexual abuse material.

Throughout the trial, Sterlingov maintained his innocence, holding firm that he was only a user of Bitcoin Fog, not its operator. His attorney, Tok Ekeland, also shared plans to appeal the verdict, pointing towards what they believe are unjust accusations. However, the evidence presented at trial linked the majority of crypto deposits in Sterlingov’s exchange accounts directly to Bitcoin Fog, convincing the jury of his guilt.

Officials from the Internal Revenue Service and the Justice Department see the trial's success as a testament to the government's dedication to uncovering and prosecuting people who use technology to conceal criminal activities. Despite the defense's efforts, including testimony from professional witness J.W. Verret, who criticized the on-chain forensics used in Sterlingov's indictment, the jury found Sterlingov guilty on all counts, leading to the forfeiture of a big amount of assets, including 1,354 BTC and almost $350,000 in various cryptocurrencies.

Sterlingov now faces up to 20 years in prison for the most serious charges, with sentencing scheduled for Jul. 15. This case came after another high-profile trial involving Roman Storm, co-founder of Tornado Cash, another cryptocurrency mixer sanctioned by the U.S. in August of 2022. Storm, facing similar charges, has pleaded not guilty, with his trial set for September.

Streamlining Crypto Regulation

Speaking of money laundering, The United Kingdom is poised to update its regulatory approach towards crypto assets, after a review of its existing anti-money laundering (AML) laws. In a recent consultation paper released by the Treasury, a series of amendments are proposed to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), that will be aimed at improving the framework for the oversight of crypto assets and reducing regulatory burdens.

The review, which was conducted in 2022, shines some light on the government's goal for "smarter regulation" in the crypto space. This approach will aim to reduce unnecessary regulatory hurdles, future-proofing regulations to keep pace with technological advancements, and ensuring that regulation is considered a measure of last resort. The Treasury did also point out that the effectiveness of the MLRs is dependent on a strong supervisory regime, proposing several adjustments to the supervision of crypto asset service providers.

Historically, under the MLRs, the Financial Conduct Authority (FCA) has been responsible for overseeing certain financial institutions, with crypto firms largely falling outside FCA supervision and being directly regulated under the MLRs. The new proposals suggest a shift, requiring MLRs-regulated institutions to come under FCA regulation, thereby obviating the need for separate MLRs authorization.

Crypto assets, under the current Financial Services and Markets Act 2000 (FSMA) framework, come under FCA jurisdiction only when they are used as underlying assets in regulated activities or financial instruments. The proposed changes will broaden the scope of FSMA to include activities like operating a crypto asset exchange and custody services, mandating that crypto assets not already under FCA oversight register with the FCA for MLRs supervision.

The consultation paper also addresses discrepancies between assessments made under the MLRs and FSMA, specifically concerning the criteria for control and ownership in regulated entities. There's a consideration to align the MLRs requirements more closely with those of the FSMA, potentially simplifying the regulatory landscape for crypto asset service providers by harmonizing standards of control across both regulators.

OKX Secures Key Regulatory Approval in Singapore

Meanwhile, crypto exchange OKX has taken a big step in its global expansion efforts by getting in-principle approval for a Major Payment Institution (MPI) license in Singapore through its local subsidiary, OKX SG. This preliminary nod from the Monetary Authority of Singapore (MAS) is a crucial step for OKX which will allow it to potentially offer digital payment token services and facilitate cross-border transfers within the country. OKX's president, Hong Fang believes that Singapore is a very important factor when it comes to the exchange's global strategy, pointing out the country's innovative market, regulatory clarity, and a framework that supports long-term business growth.

The MPI license allows OKX to bypass the usual financial thresholds set for payment services, empowering it to handle larger volumes. The in-principle approval from MAS also follows OKX's acquisition of a conditional license in Dubai earlier this year.

OKX is among several crypto businesses venturing into Singapore's regulatory environment, joining the likes of BitGo, Crypto.com, Coinbase, and Ripple, which have already secured their positions with full payment institution licenses.