US Charges Tornado Cash Co-Founders With Laundering Over $1B

Two Tornado Cash co-founders have been charged with conspiracy to commit money laundering and sanctions violations. 

On Wednesday, the United States Attorney’s Office announced in a press release the unsealing of an indictment charging Roman Storm and Roman Semenov with conspiracy to commit money laundering, sanctions violations and conspiracy to operate an unlicensed money-transmitting business. The charges against two of Tornado Cash’s co-founders arise from their alleged creation, operation, and promotion of the crypto mixer. According to the press release, Tornado Cash facilitated over $1 billion in money laundering transactions and laundered hundreds of millions from the North Korean cybercrime organization, the Lazarus Group. 

Strom and Semenov Knew They Were Aiding Money Laundering

US Attorney Damian Williams said:

“As alleged, Tornado Cash was an infamous cryptocurrency mixer that laundered more than $1 billion in criminal proceeds and violated U.S. sanctions.  Roman Storm and Roman Semenov allegedly operated Tornado Cash and knowingly facilitated this money laundering.  

While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes.  Today’s indictment is a reminder that money laundering through cryptocurrency transactions violates the law, and those who engage in such laundering will face prosecution.”

In the announcement, the US Attorney’s Office said Roman Storm was arrested on Wednesday in the State of Washington, but Roman Semenov remains at large. 

The Wall Street Journal reports, Tornado’s alleged third co-founder, Alexey Pertsev, was arrested in the Netherlands in August on money laundering charges. Pertsev is under house arrest in the Netherlands as he awaits trial.

 CNBC quotes Brian Klein, Roman Strom’s lawyer, who said: “We are incredibly disappointed that the prosecutors chose to charge Mr. Storm.” 

Klein added they believe prosecutors “did so based on a novel legal theory with dangerous implications for all software developers.”  

Storm’s lawyer further said:

“Mr. Storm has been cooperating with the prosecutors’ investigation since last year and disputes that he engaged in any criminal conduct. There is a lot more to this story that will come out at trial.” 

On Wednesday, the Office of Foreign Asset Control (OFAC) also sanctioned Roman Semenov. The OFAC banned Americans from using the cryptocurrency mixer in August 2022. 

Wednesday’s indictment was a joint effort by the Federal Bureau of Investigation (FBI), the Justice Department and the Internal Revenue Service’s Criminal Investigation unit. 

Attorney General Merrick B. Garland commented:

“These charges should serve as yet another warning to those who think they can turn to cryptocurrency to conceal their crimes and hide their identities, including cryptocurrency mixers: it does not matter how sophisticated your scheme is or how many attempts you have made to anonymize yourself, the Justice Department will find you and hold you accountable for your crimes.”

 Christopher A. Wray, Director of the FBI, said:

“Today’s announcement should remind criminal organizations everywhere in the world that they are neither untraceable nor anonymous.  You can’t hide from us behind a keyboard — whether you’re a hacker or facilitator.  Those charged today engaged in a conspiracy to launder money for cybercriminals, including for a North Korean cybercrime organization seeking to evade sanctions.  

As we have with this operation, the FBI is going to keep dismantling the infrastructure used by cyber criminals to commit and profit from their crimes, and holding anyone who assists those criminals accountable.” 

US Court Dismisses Appeal to Lift Sanctions on Tornado

US District Judge Robert Pitman dismissed an appeal filed by Tornado Cash users to lift the sanctions imposed on the crypto mixer. Judge Pitman agreed with the government and Treasury Department on all of its claims and granted a summary judgement in the case. The court filing said:

“The Court finds that Tornado Cash is an association within the ordinary meaning of the term and is, therefore, an entity that may be designated per OFAC regulations.”

Disclaimer: 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.