In a recent turn of events, the founders of cryptocurrency mixing platform Tornado Cash, Roman Storm and Roman Semenov have been slapped with charges by the U.S. Attorney’s Office for the Southern District of New York. They stand accused of conspiring to commit money laundering, sanctions violations, and running an unlicensed money transmitting business, according to the latest indictment.
Storm has been taken into custody in Washington, whilst Semenov is yet to be apprehended. Meanwhile, third co-founder, Alexey Pertsev, also faces separate legal action in Amsterdam for his involvement with Tornado Cash.
Cryptomixing services like Tornado Cash scramble the transaction history of digital currency, potentially veiling any untoward activities. Though some users may seek such services for privacy reasons, it also shields illicit financial activities like money laundering.
Tornado Cash, a byproduct of 2019 open-source research by the Zcash team, deemed its platform “unstoppable” due to its decentralized nature, according to Semenov. However, U.S. Attorney Damian Williams pointed out that Storm and Semenov knowingly provided cover for hackers and fraudsters to obscure their ill-gotten gains.
The indictment is tied to Tornado Cash’s facilitation of a staggering $1 billion in money laundering transactions, including over $455 million stolen by the North Korean cybercrime syndicate, Lazarus Group, the SDNY revealed. Moreover, Tornado Cash was sanctioned by the Office of Foreign Assets Control (OFAC) in August 2022 for aiding in the laundering of over $7 billion in digital assets, which precipitated a blanket ban on U.S. individuals and businesses from utilizing their service.