Bitcoin Fog Operator’s Appeal Hearing Tests U.S. Jurisdiction Over Cross-Border Crypto Services

According to Huoxing Finance, on May 13, the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments regarding the appeal of Roman Sterlingov’s conviction, the operator of the Bitcoin mixing service Bitcoin Fog. The case tests a core theory of the U.S. Department of Justice: that global internet-based encryption services are subject to U.S. money transmission laws if they serve U.S. users and facilitate cross-border fund transfers, even if primarily operated outside the United States. The defense argued that the U.S. government artificially established jurisdiction by deploying undercover agents to make minimal transactions, raising concerns that such a standard could subject any website to U.S. enforcement. The prosecution emphasized that Bitcoin Fog intentionally served international users, including those in the U.S., and therefore must comply with U.S. regulations. Judges also critically questioned the reliability of the FBI’s use of “IP overlap” analysis to link Sterlingov to the service, noting a lack of scientific validation. The outcome of this case will impact similar prosecutions against developers of privacy tools such as Tornado Cash and Samourai Wallet, as well as define the boundaries of U.S. cross-border enforcement against cryptocurrency services.