Bitcoin Fog Case: US Government Seeks 30-Year Prison Sentence for Roman Stringoff

The United States government has recommended a 30-year prison term and a $100,000 fine for Roman Sterlingov, a Swedish-Russian national. Sterlingov, convicted of money laundering and running an unlicensed money transmission business, is linked to Bitcoin Fog—a service designed to obscure Bitcoin transaction origins.

Controversy Over Evidence

The case has raised questions about the accuracy of on-chain analysis tools, particularly those developed by Chainalysis. Prosecutors' case lacks direct digital evidence from Sterlingov's devices. Instead, they rely on on-chain analysis, IP address matching, and connections between online accounts.

Doubts About Chainalysis’ Tools

Experts in anti-money laundering and on-chain analysis express doubts about whether Sterlingov was actually behind Bitcoin Fog. Sterlingov claims he was merely a user of the service, not its operator.

Forensic expert J.W. Verret argues that Chainalysis’ tools are flawed and should not be used to convict individuals facing lengthy prison sentences. Verret points out the lack of forensic evidence linking Sterlingov to Bitcoin Fog.

Issues with On-Chain Analysis

Laurent Salat, developer of the OXT Research tool, has identified inconsistencies in Chainalysis’ data clustering. He suggests that discrepancies may stem from misrepresentations in the heuristics used or issues with the reproducibility of Chainalysis’ Reactor software.

Elizabeth Bisbee of Chainalysis has admitted that their clustering methods have not undergone peer review, which is standard for scientific research. Despite this, the judge has deemed Reactor sufficiently reliable for evidence purposes.

Behavioural Heuristics Controversy

The case also highlights issues with using behavioural heuristics, such as transaction timing, to link transactions. A report by CipherTrace reveals significant differences between its data and Chainalysis’, recommending against the use of such analyses in court.

Future of the Case

Chainalysis aims for the court decision to validate the admissibility of their analyses, potentially setting a legal precedent. Sterlingov’s defence attorney, Tor Ekeland, has announced plans to appeal the conviction.