The founders of crypto mixer Tornado Cash have been hit with criminal charges from the US Department of Justice.
The US Attorney for the Southern District of New York has filed charges of money laundering and sanction violations.
Yesterday, an indictment was unsealed, charging Roman Storm and Roman Semenov with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business. Storm has been arrested in the State of Washington and Semonav has yet to be found.
According to the DOJ, the crypto mixer facilitated over $1 billion in money laundering, including from nefarious entities like Lazarus Group, the sanctioned North Korean cybercrime organization.
US Attorney General Merrick B. Garland issued the following statement on the charges:
“As alleged in the indictment, the defendants operated a $1 billion scheme designed to help other criminals launder and conceal funds using cryptocurrency, including by laundering hundreds of millions of dollars on behalf of a state-sponsored North Korean cybercrime group sanctioned by the U.S. government. 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.”
According to the indictment, Storm and Semonov were two of the three founders of Tornado Cash. The defendants allegedly created the core features of the Tornado Cash service, paid for critical infrastructure to operate the Tornado Cash service, promoted the Tornado Cash service, and made millions of dollars in profits from operating the Tornado Cash service.
A mixer is a service that allows users to submit crypto, which is then mingled with other crypto from other users, making it difficult to trace. Most digital assets utilizing blockchain technology leave a discernable trail of transfers and payments. A mixer attempts to cover the tracks of the crypto as a user seeks anonymity. The DOJ states that the defendants knew that bad actors were benefiting from their services, which included the proceeds of cybercrimes and hacks.
FBI Director Christopher A. Wray said that criminal organizations everywhere are traceable and not 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.”
Storm, 34, of Auburn, Washington, and Semenov, 35, a Russian national, are each charged with one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Economic Emergency Powers Act, which each carry a maximum sentence of 20 years in prison. They are also each charged with conspiracy to operate an unlicensed money-transmitting business, which carries a maximum sentence of five years in prison.
In 2022, the US Department of Treasury, Office of Foreign Assets Control (OFAC), announced sanctions against Tornado Cash.
Around the same time, Coinbase indicated that it would help to fund a challenge to the action as some individuals use mixers for legal purposes.