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Bitcoin Fog Founder Sentenced To 12.5 Years for $400M Crypto Laundering Scheme

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2 months ago

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Bitcoin Fog founder Roman Sterlingov has been sentenced to 12.5 years in prison for operating a major cryptocurrency mixing service that laundered over $400 million in criminal proceeds. 

The Washington federal court ruling was handed down by U.S. District Judge Randolph Moss, who also ordered the forfeiture of $395 million in assets, including seized cryptocurrency and Sterlingov’s interest in a Bitcoin wallet with over $103 million in Bitcoin.

Bitcoin Fog Founder Sentenced To 12.5 Years

Roman Sterlingov, a Russian-Swiss national, was convicted of multiple charges related to operating Bitcoin Fog, a cryptocurrency “mixer” that obscured the origins of digital currency transactions. The prosecution stated that Bitcoin Fog was a convenient way for criminals to launder the money obtained from criminal activities, including those related to narcotics on the darknet markets.

After a jury trial in March, Sterlingov was found guilty of conspiring to launder money, money laundering, and operating an unregistered money transmitting business.

Bitcoin Fog allowed users to combine or “mix” digital assets, making it harder to trace individual transactions. Prosecutors said that Sterlingov’s service functioned for approximately ten years and had aimed to enable untraceable transactions to support money laundering activities on an extensive scale.

Principal Deputy Assistant Attorney General Nicole M. Argentieri said that Roman Sterlingov “laundered over $400 million in criminal proceeds through Bitcoin Fog” and noted that the sentence demonstrates the Justice Department’s efforts to prosecute those who facilitate criminal conduct.

Judge Considers Deterrence in Sentencing

Judge Randolph Moss imposed a 12.5-year sentence, which was substantially less than the 30 years requested by the prosecution for the Bitcoin Fog founder. Prosecutors had argued for a severe penalty due to the prolonged and extensive nature of the scheme. “This is criminal activity of a staggering scale over a prolonged period of time,” said prosecutor Christopher Brown. 

Nonetheless, Judge Moss said that a life sentence is excessive given the offense, although he emphasized the need for a significant deterrent in the cryptocurrency sector given that it is often difficult to follow the funds.

Roman Sterlingov said during the sentencing hearing, “I am sorry for any harm that may have come from my actions.” The defense had requested the judge to impose a maximum of 7.5 years saying there was no direct proof of Sterlingov contributing to the running of the Bitcoin Fog. Concurrently, Sterlingov’s attorney, Tor Ekeland, argued that there were no service logs or eyewitness statements that would have placed his client in control of the mixing service.

Recent Sentences In The Crypto Industry

The sentencing of Sterlingov comes amid scrutiny of the crypto industry, as other high-profile cases involving fraud and money laundering unfold.

Recently, Caroline Ellison, former CEO of Alameda Research, received a two-year prison sentence for her role in the FTX fraud, which defrauded investors out of billions. 

In that case, key witnesses, including Ellison and former FTX engineer Nishad Singh, received lighter sentences or avoided prison time by cooperating with prosecutors against FTX founder Sam Bankman-Fried.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Regulation

South Korea’s Largest Exchange Upbit Under Sanctions Review by Watchdog

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51 minutes ago

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January 22, 2025

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Upbit, South Korea’s largest crypto exchange, is facing increased scrutiny over alleged Know-Your-Customer (KYC) violations. The Financial Intelligence Unit (FIU) of South Korea has scheduled a disciplinary hearing on January 21 to evaluate the exchange’s regulatory compliance. As as result, the crypto market could see significant low activity amid the review

FIU Meeting To Assess Upbit’s KYC Violations

Notably, the FIU revealed that the sanctions review meeting would assess the 500k+ suspected KYC breaches discovered during an on-site inspection for the renewal of the virtual asset service provider (VASP).

Reportedly, this sanctions-level meeting for Upbit marks the first hearing of its kind, addressing issues identified during a VASP renewal inspection. This meeting will determine the extent of sanctions Upbit could face, considering factors like lapses in KYC compliance. Analyzing the crypro exchange’s explanation for its alleged violations, the regulator would determine the severity of fines and disciplinary actions against the platform.

Upbit Faces Scrutiny Under South Korea’s FIU

Since August last year, Upbit facing investigations led by the financial watchdog. During the license renewal process, the FIU uncovered 500,000-600,000 cases of unauthorized customer verification procedures. This includes instances of accounts being approved despite the blurred customer name or registration number, making identification impossible.

Though these cases highlight the exchange’s reluctance to follow regulatory standards, it is still uncertain whether they actually mark KYC breaches. However, following the disciplinary meeting, FIU is likely to draw conclusions, particularly based on Upbit’s explanations.

South Korea’s Crypto Regulatory Norms

South Korea has embarked on its journey to establish a crypto-focused regulatory framework. In a recent development, the Financial Services Commission has kicked off discussions on the second phase of crypto regulations, especially targeting stablecoins and customer protection.

South Korea’s recent collaboration with the US and Japan to tackle the growing crypto threats also underscores the nation’s commitment to user security. Last day, the three countries jointly released a paper, warning against the North Korean hackers’ eye on crypto.

The FIU’s meeting on Upbit’s KYC violation marks a significant turning point in South Korea’s regulatory landscape. While the meeting decides its fate in South Korea, it could have a broader impact on global crypto regulations and laws.

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Nynu V Jamal

Nynu V Jamal is a passionate crypto journalist with three years of experience in blockchain, web3, and fintech spheres. She has established herself as a knowledgeable and engaging voice in the cryptocurrency and blockchain space. Her experience as an Assistant Professor in English Language and Literature has further added to her quest for crafting informative, well-researched, and accessible content.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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New SEC Leadership Under Donald Trump To Revamp Crypto Regulations

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2 hours ago

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January 22, 2025

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The incoming administration under President-elect Donald Trump is preparing to introduce changes to cryptocurrency regulations in the United States. Sources indicate that the Securities and Exchange Commission (SEC), under new leadership, will initiate a review of its current policies and enforcement actions related to crypto.

Donald Trump SEC Leadership To Reassess Crypto Enforcement Actions

A recent Reuters report suggests that top officials at the SEC, including Hester Peirce and Mark Uyeda, are planning to reassess existing crypto enforcement cases. The focus will be on cases where fraud is not alleged, with the possibility of freezing or withdrawing some lawsuits.

Under the outgoing leadership of Gary Gensler, the SEC pursued at least 83 enforcement actions involving crypto-related companies. These actions targeted firms like Coinbase and Kraken, often on the basis that their tokens were considered securities. Industry participants have long sought clarity on when and how the SEC applies its rules to digital assets.

Sources state that Peirce and Uyeda are expected to call for feedback on potential new crypto regulations. This process will address industry concerns while aligning the SEC’s rules with evolving market conditions.

Meanwhile, Bitcoin advocate Anthony Pompliano has outlined three key actions for Donald Trump to boost U.S. Bitcoin adoption. Anthony proposed repealing SAB 121 for banks to hold Bitcoin, establishing a national Bitcoin reserve, and reforming tax codes to eliminate capital gains tax on BTC payments. Pompliano believes these measures will solidify the U.S. as a crypto leader.

Proposed Regulatory Changes

The SEC is likely to revise its guidance on accounting practices for companies holding crypto assets. The current guidance has reportedly made it costly for listed firms to manage digital tokens for third parties. Changes in this area will lower barriers to institutional participation in the crypto market.

Paul Atkins, Donald Trump pick for Securities and Exchange Commission Chair, has a reputation for supporting crypto-friendly policies. However, his confirmation by the Senate may take some time. Until then, Peirce and Uyeda will lead interim efforts to reshape regulatory priorities.

Trump Administration’s Executive Orders to Accelerate Crypto Overhaul

President-elect Donald Trump is expected to issue executive orders aimed at expediting crypto regulatory reforms. These orders may direct federal agencies, including the SEC, to review their policies and promote innovation in the digital asset sector.

The administration’s pro-crypto stance has already generated excitement within the market. Bitcoin reached $100,000 for the first time in December, reflecting optimism about the regulatory environment under Trump’s leadership.

Despite the optimism, revising regulations and enforcement actions could face challenges. Legal experts note that dismissing pending cases or reopening settlements may lead to objections from courts. Resolving these issues will require careful coordination between the SEC and industry stakeholders.

The new leadership may also need months to finalize and implement any proposed rule changes. Industry representatives have previously criticized the Securities and Exchange Commission for being unwilling to engage in discussions under its former leadership.

In addition, Bitwise CIO highlighted trends driving corporate Bitcoin adoption, including MicroStrategy’s $42B acquisition plans, new FASB rules allowing firms to record BTC gains and pro-crypto policies. These factors, he notes, are encouraging more companies to integrate Bitcoin into their treasuries.

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Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Litecoin ETF Likely Next Spot Crypto ETF to Get SEC Nod; Bloomberg Analyst

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3 hours ago

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January 22, 2025

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A Litecoin ETF may be the next cryptocurrency ETF to be approved in the United States given the current circumstances. Bloomberg Senior ETF Analyst Eric Balchunas made this prediction after Canary Capital filed an amended S-1 registration form in relation to its Litecoin ETF proposal.

Amended Litecoin ETF S-1 Filing Suggests SEC Engagement

Canary Capital had submitted the S-1 registration form for the Litecoin ETF with the U.S. Securities and Exchange Commission (SEC) in October 2024. On Wednesday, the company filed an amended version of this form. According to the filing, U.S. Bancorp Fund Services would act as the administrator of the ETF, while Coinbase Custody Trust and BitGo would act as the custodians for the Litecoin of the fund.

Some of the industry watchers including the Bloomberg analysts have suggested that that the modification of the filing could be an indication of SEC’s interest. Another Bloomberg ETF analyst, James Seyffart pointed out that the amendment could mean the SEC has offered comments on the application. However, there has been no 19b-4 filing made, which is a formal application for rule change that initiates the approval process.

“We had heard chatter that the Litecoin S-1 had gotten comments back from [the] SEC,” said Balchunas in a post on X (formerly Twitter). He also said that this is in line with his earlier claim that Litecoin is ‘most likely’ to be the next cryptocurrency ETF in the United States.

New SEC Leadership Adds Uncertainty

The timing of the Litecoin ETF’s approval process could depend on upcoming changes in SEC leadership. Gary Gensler, the current SEC chair, is set to step down on Monday. Former SEC commissioner Paul Atkins, who has expressed support for the cryptocurrency sector in the past, has been nominated to lead the agency. 

However, the Senate has yet to confirm Atkins’ appointment, and the exact timeline remains uncertain.

Balchunas emphasized that the leadership transition is a “huge variable” in the approval process for the Litecoin ETF.

Growing Interest in Spot Crypto ETFs

Created in 2011 as a more efficient version of Bitcoin, Litecoin is one of the oldest and most stable blockchains. Following the announcement, the price of Litecoin spiked by more than 18% to trade at $119.46 at the time of writing. 

Analysts believe that the current bullish rally may break through the $130 barrier, with the LTC price prediction standing at $170. In addition, open interest increased by 29.58% to $575.39 million within the last 24 hours while the trading volume jumped significantly by 277.25% to $1.65 billion.

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This excitement comes in the wake of the recent approval of U.S. spot Bitcoin and Ethereum ETFs in recent months. These products outperformed the market, which led to the growth of interest among issuers in the creation of ETFs for altcoins like Solana and XRP.

A recent JPMorgan and Hashkey research note suggested that new Solana and XRP ETFs could pull in $13.6bn of new funds if they are approved within six to 12 months. The introduction of altcoin ETFs such as Litecoin may also contribute to increased institutional investments in the cryptocurrency space.

Next Steps for Litecoin ETF Approval

Even though the amended S-1 filing marks a progress, there is no certainty as to when the approval of the Litecoin ETF will be completed. The submission of a 19b-4 application would formally kick off the SEC’s decision process but Canary Capital has not given any indication of when this would happen.

The original filing of Canary identified Litecoin as a blockchain that has had “100% uptime since its inception” noting its security and stability as strengths. Industry participants are now focused on the next steps, such as the SEC’s response and the possible 19b-4 filing, as the momentum for the approval of the Litecoin ETF picks up.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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