CipherTrace, at the defence’s request, challenged the evidence linking Russian Roman Sterlingov to operating the cryptocurrency mixer Bitcoin Fog, obtained by the court on the basis of Chainalysis data.
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Experts say the blockchain-analytics tools used in the case were misapplied. Yet they formed the basis for the charge that Sterlingov was the operator of the service, allegedly involved in laundering around $336 million through cryptocurrency.
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CipherTrace described such a conclusion as erroneous. They argued that the Chainalysis data and their blockchain-analysis methodology are based on experimental algorithms and have never undergone independent audit.
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\u201cThere is no evidence in the network that Sterlingov was the organizer of Bitcoin Fog,\u201d the report states.
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To properly establish the defendant’s role, the government would need access to the mixer’s servers and the seed phrases from his wallets, but this was not done. Experts say that in the absence of these factors, the blockchain-analysis data are insufficient.
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\u201cBecause the Chainalysis attribution is not verifiable, it should not be used in court,\u201d CipherTrace concluded.
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As reported in April 2021, U.S. authorities arrested the alleged operator of the Bitcoin Fog mixing service, Roman Sterlingov. He is charged with laundering more than 1.2 million BTC (about $336 million at the time) and providing payment services without a license.
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The investigation says that it has proven Sterlingov’s link to the Bitcoin Fog domain via his transactions in the Liberty Reserve system for illicit data sales and accounts on the defunct Mt. Gox exchange.
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Identifying him as the primary operator of the mixer was also based on analyses of Bitcoin transactions, financial reports, Internet provider records, and emails.