The D.C. Circuit’s September 25, 2026 opinion upheld the challenged district court decisions in Roman Sterlingov’s Bitcoin Fog case, including the use of a willful-blindness jury instruction. The court said jurors could infer deliberate avoidance from a combination of operating choices: Bitcoin Fog automatically deleted records weekly, did not verify accounts, and asked users no questions. It did not hold that using a cryptocurrency mixer, or operating one, proves criminal intent.
What did the D.C. Circuit decide?
A federal jury convicted Sterlingov on March 12, 2024, of money-laundering conspiracy, sting money laundering, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act. In its September 25, 2026 opinion, the U.S. Court of Appeals for the D.C. Circuit affirmed the district court decisions challenged on appeal. One issue was whether the trial evidence supported giving jurors a willful-blindness instruction.
That issue was about the evidence and instruction in Sterlingov’s trial. It was not a freestanding ruling that cryptocurrency mixers are unlawful, or that a person who uses one necessarily knows about criminal activity.
How did the court connect Bitcoin Fog’s operations to intent?
The instruction distinguished deliberate avoidance from carelessness
As the appellate opinion recounts it, the trial instruction said jurors could find that Sterlingov “had knowledge of a fact” if he “deliberately closed his eyes to what would otherwise have been obvious to him.” It also cautioned that knowledge could not be established merely by showing he was “negligent, reckless, careless, or foolish.” Those are words from the trial court’s instruction as quoted in the appellate opinion, not a new legal test created by the appeal.
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The parties agreed that a willful-blindness instruction was appropriate where a defendant claimed a lack of guilty knowledge and the trial evidence supported an inference of deliberate ignorance. The appellate panel described such instructions as appropriate in “rare circumstances” and warned courts to be wary of them. It did not try to define those circumstances more broadly because the parties agreed on the relevant formulation.
The defense disputed involvement and knowledge
Sterlingov argued that his defense was that he had not been involved in Bitcoin Fog, rather than that he was unaware of users’ conduct. The panel concluded that this was not the whole picture: he also contested whether the government had proved he saw messages from an undercover agent explaining why the agent was using the service. In the court’s view, that left a lack-of-knowledge issue for the jury.
The jury could consider record deletion and the absence of checks together
The appellate court said a reasonable jury could infer deliberate avoidance from Bitcoin Fog’s architecture and operating policies. Weekly automatic deletion could limit Sterlingov’s access to information about users and their bitcoin. The absence of account verification, coupled with the fact that the service asked users zero questions, could also support an inference that the setup helped avoid indications that users were using it for criminal purposes.
The ruling’s reasoning is cumulative: the panel considered those features together in the context of the trial record. Its conclusion was that the evidence supported giving the instruction—not that any one feature, on its own, established criminal knowledge.
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- It does not make mixing itself proof of intent. Privacy-seeking, a cryptocurrency transaction, or use of a mixer does not automatically establish that someone knew of criminal conduct.
- It does not decide another defendant’s state of mind. Whether an inference of deliberate avoidance is available depends on the evidence in that case, including what the defendant knew or may have consciously avoided learning.
- It does not equate a permitted inference with a required conclusion. The panel held that the trial evidence supported giving jurors the instruction. That is different from saying a jury must infer knowledge, or that the same evidence would prove intent in a different prosecution.
How should the Bitcoin Fog transaction figures be read?
The figures describe different things. The U.S. Department of Justice’s 2024 announcement characterized Bitcoin Fog as having processed well over 1.2 million BTC, valued at nearly $400 million at the time of the transactions. That is the government’s description of total service volume; it does not mean every coin was independently identified as criminal proceeds.
The DOJ also reported an IRS Criminal Investigation analysis of direct transactions involving known darknet markets. Its breakdown was approximately 486,861.69 BTC received directly from those markets, valued at about $54,897,316 at transaction time, and approximately 164,931.13 BTC sent directly to them, valued at about $23,690,956 at transaction time.
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| Figure | What it measures | Attribution and qualification |
|---|---|---|
| Well over 1.2 million BTC; nearly $400 million | Total Bitcoin Fog volume as described in the government announcement | U.S. Department of Justice, 2024; value stated at the time of the transactions. Not a measure of coins all independently identified as criminal proceeds. |
| Approximately 486,861.69 BTC; about $54,897,316 | Bitcoin received directly from known darknet markets | IRS Criminal Investigation analysis as reported by the U.S. Department of Justice, 2024; dollar value at transaction time. |
| Approximately 164,931.13 BTC; about $23,690,956 | Bitcoin sent directly to known darknet markets | IRS Criminal Investigation analysis as reported by the U.S. Department of Justice, 2024; dollar value at transaction time. |
| About $400 million versus Sterlingov’s proposed figure of about $78 million | Amounts discussed in the sentencing-guideline calculation | U.S. Court of Appeals for the D.C. Circuit, 2026. The panel said Sterlingov had not met his burden to separate allegedly legitimate funds; it did not reach constitutional or statutory objections to that burden. This sentencing discussion is not a universal rule for proving intent at trial. |
The DOJ’s press release also recounted the government’s trial account of blockchain tracing, darknet-market links, fees and commissions, exchange accounts, and messages. Those details should be understood as the government’s account where the appellate opinion does not independently discuss them in the same terms. The DOJ release attributed a statement about tracing bitcoin through the blockchain to Deputy Attorney General Lisa Monaco; that was a prosecution-side characterization, not a judicial finding.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What should readers compare in other cryptocurrency cases?
A useful comparison should separate the evidence about intent from the procedural issue a court is deciding. Relevant questions include:
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- What evidence shows the defendant knew of illicit activity, or deliberately avoided learning about it?
- Does the defendant dispute involvement, knowledge, or both?
- What did the platform’s design and record-retention practices reveal, and what do they establish about this particular defendant?
- Were there direct communications or undercover messages, and is there evidence they reached the defendant?
- Was the court reviewing whether an instruction was warranted, whether evidence was sufficient, or a different issue?
- Do transaction totals refer to direct flows to criminal markets, alleged criminal proceeds, or total commingled service volume?
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