US authorities have arrested the alleged mastermind behind the multi-million dollar dark web-based BTC mixing service Bitcoin Fog after analyzing blockchain data over 10 years.
Authorities coldly warned other users of illegal blockchain services that whatever you do today could haunt you again, because “this activity will remain forever in this book,” and increasingly sophisticated analytical technologies can track crimes committed in previous years.
About ten years ago, Bitcoin Fog allowed users to hide the origin and intent of the cryptocurrency to users. However, the IRS accuses Russian and Swedish citizen Roman Stylov of laundering more than $ 1.2 million worth of $ 336 million money while working as a site administrator.
The Pound Sterling was caught on April 27 in Los Angeles, and the IRS estimated he was receiving a 2% to 2.5% commission on mixed services per transaction – about $ 8 million at the time, but significantly more today.
Authorities estimate that at least 23% of the bitcoins that passed through the mixing service were transported to dark online drug markets such as the Silk Road.
Stirling’s arrest was the result of actions by the authorities, who since 2011 have removed the BTC network of transactions associated with the mixing service, using the Bitcoin blockchain to identify the site’s operator.
Stirling created the site in late 2011 under a Japanese pen name meaning “Happy New Year” and spread the bitcoin haze to exclude any possibility that authorities “will discover your payments and make it impossible to prove any link between deposits and withdrawals … … services.”
In 2019, IRS agents recruited Sterling through the platform, claiming they wanted to launder profits from Ecstasy sales. Transactions were processed without a response.
Police were able to prove that Sterling paid for hosting the Bitcoin Fog server with the now-discontinued Liberty Reserve so that they could track when it bought Liberty Reserve using bitcoins transferred from the groundbreaking cryptocurrency exchange Mt Gox.
From there, the IRS was able to determine the home address and phone number that Stirling had recorded in his account, and finally a Google Drive account containing instructions describing the steps he had taken to purchase Liberty Reserve coins.
“This is another example of how investigators, with the right tools, can use cryptocurrency transparency to track the flow of illicit money,” said Jonathan Levine, co-founder of forensic firm Chainalysis.
Computer scientist Sarah Micklegon said:
“When it comes to analyzing the blockchain, we say over and over again that all of this activity is in this ledger forever, and if you did something bad 10 years ago, you could be arrested and arrested for that day.”
Despite the pound sterling has been arrested, the Bitcoin Fog is still online, although it is unclear who is running the site.