A federal appeals court heard arguments from prosecutors and defense attorneys over how far U.S. money transmission and venue laws extend to internet-based crypto service platforms during oral arguments in the appeal of alleged Bitcoin Fog operator Roman Sterlingov.
The hearing took place on Tuesday in the United States Court of Appeals for the District of Columbia Circuit and focused primarily on whether prosecutors had enough evidence to prove Bitcoin Fog operated in Washington, D.C., despite the defense arguing the service was run abroad.
Sterlingov was convicted in 2024 on charges including money laundering conspiracy and operating an unlicensed money transmitting business tied to Bitcoin Fog, a crypto mixing service that prosecutors said moved hundreds of millions of dollars tied to darkweb markets. Defense attorney Tor Ekeland argued the government artificially “manufactured” a venue in D.C. by having undercover agents use Bitcoin Fog from within the district.
“If this is the standard for venue in internet cases, then any government agent can just unilaterally send a message to any website anywhere in the world,” Ekeland argued.
Prosecuting attorney Jenny Ellickson countered that Bitcoin Fog knowingly operated an international money transmission business that served U.S. users and was therefore subject to U.S. laws, including D.C.
The panel then spent time examining the reliability of testimony from an FBI investigator who linked accounts and transactions using “IP overlap” analysis, which the defense argued lacked established “error rates” or “scientific peer-review.”
One judge appeared to side with the defense on this point, repeatedly questioning Ellickson on the statistical basis that led the FBI investigator to conclude that overlapping IP logins were tied to the same user.
The case is now submitted to the three-judge panel, which will decide whether to uphold, reverse, or partially vacate Sterlingov’s conviction.
Money transmission statutes
The appeal lands amid a contentious battle over how aggressively U.S. prosecutors can pursue developers of crypto privacy tools and services under money transmission laws.
At the center of this is Section 1960, the federal unlicensed money transmission law also used against Tornado Cash developer Roman Storm and Samourai Wallet co-founders William Lonergan Hill and Keonne Rodriguez.
The latest draft of the Clarity Act now proposes preserving Section 1960 liability only where a person acts with “specific intent and knowledge” to help move criminal funds.
Crypto policy group Coin Center backed the revised language this week, arguing it could make it harder to bring overly broad prosecutions against developers and crypto services.
However, standards like “intent” and “knowledge” are subjective and could still leave developers exposed depending on how prosecutors interpret a service’s role in facilitating transactions.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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