The case of the Bitcoin fog could test cryptocurrency tracking

If the prosecution does not produce clear evidence as the Sterlingov case unfolds, it may have to rely on the more indirect digital connections between Sterlingov and Bitcoin Fog it describes in the indictment. based on cryptocurrency tracking techniques. This statement shows a trail of 2011 financial transactions that allegedly linked Sterlingov to payments made to register the Bitcoinfog.com domain, which wasn’t Bitcoin Fog’s true dark website, but a mainstream website advertising it.

The funds to pay for this domain went through multiple accounts and were eventually exchanged from Bitcoin to the now defunct Liberty Reserve digital currency, prosecutors say. But the IRS says that IP addresses, blockchain data, and phone numbers linked to various accounts link all payments to Sterlingov. A Russian-language document in Sterlingov’s Google account also describes a method of hiding payments similar to the one he is accused of using to register this domain.

Sterlingov says he “doesn’t remember” whether he started Bitcoinfog.com and points out that at the time he was working as a web designer for a Swedish marketing firm, Chief Marknadskommunikation. “It’s been 11 years,” Sterlingov said. “It’s really hard for me to say something specific.”

Advertising

Advertising

Although the government accommodations proving that Sterlingov created a website to promote Bitcoinfog.com in 2011, however – and Ekeland even claims this is based on faulty IP address connections resulting from Stertlingov’s use of a VPN – Ekeland points out that this is a lot other than running the dark service Bitcoin Fog for the next decade, it stayed online and laundered the proceeds of crime.

To show Sterlingov’s deeper connection with Bitcoin Fog beyond registering a domain, the IRS claims it used blockchain analytics to track Bitcoin payments that Sterlingov would make as “transactions.” testing ”in service in 2011 prior to its public launch. Investigators also say Sterlingov continued to receive revenue from Bitcoin Fog until 2019, also based on their observations on cryptocurrency payments recorded on the Bitcoin blockchain.

Ekeland retorts that the defense has not been provided with details on this blockchain analysis and points out that it was excluded from the latest replacement indictment against Sterlingov, which was filed last week. This means, he argues, that the government has based the core of his case on an unproven and relatively new form of forensics, one that, he says, has led them to the wrong suspicion. “Has it been peer reviewed? No, “Ekeland says of blockchain analysis.” Is this generally accepted in the scientific community? No. Does it have a known error rate? No. It is not verifiable. They can talk nonsense and everyone has to believe it.

Ekeland said the discovery documents in the case showed that the tracking of the cryptocurrency of the indictment was done with tools sold by Chainalysis, a New York-based blockchain analytics startup, in addition to consulting assistance from Excygent, a government contractor specializing in cybercrime and cryptocurrency investigations, which Chainalysis acquired in 2021.

Ekeland said Chainalysis, which received $ 8.6 billion in a recent investment round and often used in high-level law enforcement investigations of cybercriminals, had a conflict of interest in the case given its addiction. financial from US government contracts and a stream of former government investigators. who went to work for Chainalysis. “It’s a story of people making a profit and moving forward in their careers, throwing people in jail for promoting their blockchain analytics tool which is junk science and doesn’t stand up to any scrutiny,” Ekeland says. She adds that, based on the evidence provided in Sterlingov’s case, she believes that “catenalysis is the theranos of blockchain analysis”.

Leave a Comment