If the prosecution doesn’t produce transparent proof as Sterlingov’s case unfolds, it’ll need to depend at the extra oblique virtual connections between Sterlingov and Bitcoin Fog that it describes within the commentary of information assembled by way of the IRS’s legal investigations department, a lot of which used to be in keeping with cryptocurrency tracing tactics. That commentary presentations a path of economic transactions from 2011 allegedly linking Sterlingov to bills made to sign up the Bitcoinfog.com area, which used to be no longer Bitcoin Fog’s precise dark-web website however a standard web site that marketed it.
The budget to pay for that area traveled via a number of accounts and have been ultimately exchanged from Bitcoin for the now-defunct virtual forex Liberty Reserve, consistent with prosecutors. However the IRS says IP addresses, blockchain knowledge, and make contact with numbers related with the quite a lot of accounts all attach the bills to Sterlingov. A Russian-language report in Sterlingov’s Google Account additionally described one way for obfuscating bills very similar to the only he’s accused of the use of for that area registration.
Sterlingov says he “can’t keep in mind” if he created Bitcoinfog.com and issues out that he labored on the time as a cyber web fashion designer for a Swedish advertising corporate, Capo Marknadskommunikation. “That used to be 11 years in the past,” Sterlingov says. “It’s in reality exhausting for me to mention anything else particular.”
Even supposing the federal government can turn out that Sterlingov created a web site to advertise Bitcoinfog.com in 2011, on the other hand—and Ekeland argues even this is in keeping with inaccurate IP deal with connections that got here from Stertlingov’s use of a VPN—Ekeland issues out that’s very other from working the Bitcoin Fog dark-web provider for the next decade it remained on-line and laundered legal proceeds.
To turn Sterlingov’s deeper connection to Bitcoin Fog past a website registration, the IRS says it used blockchain research to track Bitcoin bills Sterlingov allegedly made as “check transactions” to the provider in 2011 ahead of it used to be publicly introduced. Investigators additionally say that Sterlingov persisted to obtain earnings from Bitcoin Fog till 2019, additionally in keeping with their observations of cryptocurrency bills recorded at the Bitcoin blockchain.
Ekeland counters that the protection hasn’t won any main points of that blockchain research and issues out that it used to be unnoticed of the latest superseding indictment in opposition to Sterlingov, which used to be filed final week. That suggests, he argues, that the federal government has primarily based the core of its case on an unproven, rather new type of forensics—person who he says led them to the incorrect suspect. “Has it been peer-reviewed? No,” Ekeland says of blockchain research. “Is it normally authorized within the medical neighborhood? No. Does it have a identified error fee? No. It’s unverifiable. They may be able to say overall nonsense, and everybody has to take it on religion.”
Ekeland says that discovery paperwork within the case display that the prosecution’s cryptocurrency tracing used to be carried out with gear bought by way of Chainalysis, a New York–primarily based blockchain research startup, in conjunction with consulting lend a hand from Excygent, a central authority contractor focusing on cybercriminal and cryptocurrency investigations, which Chainalysis bought in 2021.
Ekeland argues that Chainalysis, valued at $8.6 billion in a up to date funding spherical and continuously utilized in high-profile cybercriminal legislation enforcement investigations, had a struggle of hobby within the case, given its monetary dependence on US executive contracts and a go with the flow of former executive investigators who’ve long gone to paintings for Chainalysis. “It is a tale of other folks profiteering and advancing their careers, throwing other folks in prison to advertise their blockchain research instrument this is junk science and doesn’t resist any scrutiny,” says Ekeland. He provides that, in keeping with the proof supplied in Sterlingov’s case, he believes “Chainalysis is the Theranos of blockchain research.”