CipherTrace expert says Chainalysis data contributed to ‘wrongful arrest’ of alleged Bitcoin Fog founder

Jonelle Nonetheless, the director of investigations and intelligence at CipherTrace, a Grasp Card firm, not too long ago submitted a report supporting the protection in the US v. Roman Sterlingov, a felony case involving the Bitcoin Fog cryptocurrency mixing service. 

The corporate’s involvement within the case comes on the behest of Sterlingov’s protection attorneys, and features a 41-page report detailing Nonetheless’s opinion on the efficacy of information obtained by the prosecution from blockchain investigation group Chainalysis.

On the core of the report is the assertion that knowledge supplied by Chainalysis can’t be corroborated on-chain:

“The blockchain forensics and tracing instruments used on this case had been misused to erroneously conclude that Mr. Sterlingov was the operator of Bitcoin Fog when no such proof exists on-chain.”

Sterlingov has been accused by the US authorities of being the founding father of Bitcoin Fog, a cryptocurrency mixing service that allegedly participated in unlawful cash laundering transactions within the claimed quantity of $336 million.

As Cointelegraph reported, Sterlingov was arrested in April of 2021 after a 10-year investigation resulted within the allegations. In accordance with his attorneys, the felony claims had been based mostly on proof supplied by Chainalysis.

In a latest podcast, Sterlingov’s authorized representatives, Tor Eklund and Michael Hassard, laid out the case from their perspective. They assert that Chainalysis didn’t hint transactions again to their shopper utilizing knowledge and as a substitute merely supplied the prosecution with an opinion on the matter of who based Bitcoin Fog.

Eklund and Hassard declare that the federal government’s case is constructed on Chainalysis’ knowledge and the assertion that in 2019 IRS brokers despatched a message to “no matter they suppose is the helpdesk or no matter” at Bitcoin Fog asking if the service could be good to launder Bitcoin they’d earned promoting “Molly,” (a road title for 3,4-methyl​enedioxy​methamphetamine).

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The legal professionals declare that Bitcoin Fog by no means responded to the message and that the IRS brokers went forward and proceeded to make use of the Bitcoin Fog service in what the US now claims was a laundering scheme. Eklund and Hassard say the federal government by no means truly bought molly for Bitcoin with the intent of laundering the proceeds by the Bitcoin Fog service.

The report supplied by CipherTrace highlights a few of the points surrounding the Chainalysis knowledge, together with Nonetheless’s opinion that the conclusions drawn from it (that Sterlingov is the founding father of Bitcoin Fog) can’t be demonstrated with on-chain knowledge.

Nonetheless, the report’s writer finally concludes that “Blockchain forensics ought to solely be used to generate investigatory leads. Standing alone, they’re inadequate as a main supply of proof.” They proceed to state that it’s “putting” that the US and Chainalysis reached the conclusions they did with out “ any corroborating proof for the blockchain forensics.”

“To forestall wrongful arrests like this one,” writes Nonetheless, “it’s endorsed that Chainalysis, and their methodologies of blockchain evaluation be independently audited.”

As the US has seized all of Sterlingov’s property whereas he’s on trial, his protection staff and CipherTrace have aided his authorized efforts pro-bono.