If the prosecution doesn’t develop particular evidence as Sterlingov’s case unfolds, it’ll have to count on the more indirect digital connections between Sterlingov and Bitcoin Fog that it describes in the statement of information assembled by the IRS’s prison investigations division, great of which changed into once primarily based mostly on cryptocurrency tracing tactics. That statement shows a fade of monetary transactions from 2011 allegedly linking Sterlingov to funds made to register the Bitcoinfog.com domain, which changed into once no longer Bitcoin Fog’s precise sad-web position nonetheless a traditional web content that advertised it.
The funds to pay for that domain traveled through a complete lot of accounts and were eventually exchanged from Bitcoin for the now-defunct digital currency Liberty Reserve, in step with prosecutors. However the IRS says IP addresses, blockchain information, and phone numbers linked with the many accounts all connect the funds to Sterlingov. A Russian-language document in Sterlingov’s Google Sage additionally described a design for obfuscating funds corresponding to the one he’s accused of utilizing for that domain registration.
Sterlingov says he “can’t bear in mind” if he created Bitcoinfog.com and components out that he labored at the time as an online clothier for a Swedish marketing company, Capo Marknadskommunikation. “That changed into once 11 years prior to now,” Sterlingov says. “It’s for sure arduous for me to suppose the leisure instruct.”
Even though the federal government can present that Sterlingov created a domain to promote Bitcoinfog.com in 2011, nonetheless—and Ekeland argues even that’s predicated mostly on scramble IP address connections that came from Stertlingov’s use of a VPN—Ekeland components out that’s very diversified from working the Bitcoin Fog sad-web provider for the next decade it remained online and laundered prison proceeds.
To screen Sterlingov’s deeper connection to Bitcoin Fog beyond a domain registration, the IRS says it outmoded blockchain diagnosis to hint Bitcoin funds Sterlingov allegedly made as “test transactions” to the provider in 2011 before it changed into once publicly launched. Investigators additionally instruct that Sterlingov continued to receive income from Bitcoin Fog except 2019, additionally primarily based mostly on their observations of cryptocurrency funds recorded on the Bitcoin blockchain.
Ekeland counters that the protection hasn’t got any puny print of that blockchain diagnosis and components out that it changed into once uncared for of the most most up-to-date superseding indictment towards Sterlingov, which changed into once filed last week. That means, he argues, that the federal government has primarily based mostly the core of its case on an unproven, barely original fetch of forensics—one that he says led them to the wrong suspect. “Has it been appreciate-reviewed? No,” Ekeland says of blockchain diagnosis. “Is it in most cases well-liked in the scientific crew? No. Does it have a known error fee? No. It’s unverifiable. They’ll instruct full nonsense, and everyone has to take it on faith.”
Ekeland says that discovery paperwork in the case screen that the prosecution’s cryptocurrency tracing changed into once performed with tools equipped by Chainalysis, a Current York–primarily based mostly blockchain diagnosis startup, along with consulting reduction from Excygent, a government contractor that concentrate on cybercriminal and cryptocurrency investigations, which Chainalysis acquired in 2021.
Ekeland argues that Chainalysis, valued at $8.6 billion in a most up-to-date investment round and continuously outmoded in excessive-profile cybercriminal regulation enforcement investigations, had a conflict of passion in the case, given its financial dependence on US government contracts and a drift of outdated-fashioned government investigators who have gone to work for Chainalysis. “Right here’s a tale of of us profiteering and advancing their careers, throwing of us in penal complicated to promote their blockchain diagnosis tool that’s junk science and doesn’t withstand any scrutiny,” says Ekeland. He adds that, primarily based mostly on the evidence equipped in Sterlingov’s case, he believes “Chainalysis is the Theranos of blockchain diagnosis.”