The US Department of Justice (DOJ) has charged Tornado Cash founders Roman Storm and Roman Semenov with money laundering and sanctions violations tied to the infamous cryptocurrency mixer Tornado Cash. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) added Roman Semenov to the sanctioned persons list.
According to a press release by the US Attorney’s Office for the Southern District of New York on Wednesday, August 23, Roman Storm, 34, of Washington, and Roman Semenov,35, a Russian national, have been charged with “conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business” Tornado Cash that facilitated the laundering of more than $1 billion in criminal money, and for North Korean Lazarus Group. While Storm has been arrested by the FBI, Semenov remains at large.
Tornado Cash: A Heaven for Criminals and Hackers
According to the indictment unsealed in the Manhattan Federal Court, Roman Storm and Roman Semenov were two of three founders who, with their co-conspirators, “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.”
They advertised Tornado Cash as a tool for untraceable and anonymous financial transactions but never implemented any control, like Know Your Customer (KYC) and anti-money laundering program, as required by law to prevent the criminal use of the protocol.
The protocol became a safe haven for criminals to launder their ill-gotten gains. Both defendants were aware of these money laundering transactions and “received complaints and requests for help from victims of hacking and other cybercrimes,” reads the press release.
In April and May 2022, a sanctioned North Korean hacking organization allegedly used Tornado Cash to launder hundreds of millions of dollars in hacking proceeds. Storm and Semenov were aware of these sanctions-violating transactions. They implemented a change to the protocol to show compliance with sanctions, but in reality, it was ineffective.
The latest indictment is the continuation of US authorities’ crackdown, which began in August 2022, when, as reported, OFAC sanctioned Tornado Cash for its role in laundering funds for the Lazarus Group. However, the crypto mixer has also been implicated in many other hacks as well. Victims of these incidents requested several times to offer assistance, but they never entertained any of them. In total, both founders “knowingly” facilitated the laundering of more than $1 billion in criminal proceeds of cyber criminals and sanctioned groups.
Storm and Semenov have been charged with “one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Economic Emergency Powers Act.” Each charge carries a maximum sentence of 20 years in prison. They are also each charged for operating an unlicensed money-transmitting business, with a maximum sentence of five years in prison.
While still at large, OFAC has added Roman Semenov to its Specially Designated Nationals and Blocked Persons (SDN) list. Roman Storm was arrested in Washington on Wednesday, August 23. The third Tornado Cash co-founder, Alexey Pertsev, was arrested in the Netherlands on money laundering charges in August 2022.