Bitcoin Fog Appeal Puts U.S. Reach Over Cross-Border Crypto Services Under the Microscope

Huoxing Finance reported that on May 13, the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments in the appeal of Roman Sterlingov, who was convicted for operating the Bitcoin mixing service Bitcoin Fog. The proceeding is shaping up as a test of a central U.S. Department of Justice position: internet-based encryption and privacy services can fall under U.S. money-transmission laws when they serve U.S. customers and facilitate cross-border transfers, even if the business is largely run outside the United States. Sterlingov's defense said the government manufactured jurisdiction by using undercover agents to conduct small, limited transactions, warning that such a theory could expose virtually any website to U.S. enforcement. Prosecutors argued that Bitcoin Fog deliberately catered to international users, including those in the U.S., and therefore was required to comply with U.S. rules. Judges also pressed the government on the FBI's use of "IP overlap" analysis to link Sterlingov to the service, questioning its reliability and pointing to a lack of scientific validation. The ruling is expected to influence related cases involving privacy-tool developers, including Tornado Cash and Samourai Wallet, and to help define the limits of U.S. cross-border enforcement against cryptocurrency services.