The founders of cryptocurrency mixer Tornado Cash have been indicted by US law enforcement for laundering more than $1 billion in criminal proceeds.according to statement US Department of Justice officers Roman Seminov and Roman Storm were also involved in laundering hundreds of millions of dollars from the Lazarus Group, a cyber crime syndicate linked to the North Korean state. Mr. Storm was arrested in Washington state yesterday, while Mr. Seminoff remains at large.
“As they say, Tornado Cash was a notorious cryptocurrency mixer that laundered over $1 billion in criminal proceeds and violated U.S. sanctions,” U.S. Attorney Damian Williams explained. “Roman Storm and Roman Semyonov allegedly operated Tornado Cash and deliberately facilitated this money laundering.”
A cryptocurrency mixer, or coin mixer, is a business that allows users to scramble transactions between different cryptocurrency addresses so that the transaction becomes untraceable and the original sender or recipient cannot be traced. In recent years, law enforcement agencies have pushed these organizations to implement basic “know your customer” (KYC) protocols to keep users anonymous and prevent the use of such platforms in money laundering processes. I’m here. Tornado Cash did not implement such a protocol, according to the indictment.
The indictment follows the U.S. Treasury Department earlier this month sanctioning Tornado Cash for failing to impose adequate anti-money laundering protections. Bryan Nelson, Undersecretary for Terrorism and Financial Intelligence, said, “Tornado Cash, despite having public guarantees, has had effective regulation to routinely stop malicious cyber attackers from laundering money.” “We have repeatedly failed to impose , and we have not taken basic steps to address that risk.” at the US Treasury Department.
Lazarus Connection
The indictment also includes details about how Semyonov and Storm laundered the illicit proceeds of the Lazarus Group, a cybercrime firm with close ties to the North Korean state. In recent years, the group has repeatedly targeted cryptocurrency businesses, healthcare providers, and IT vendors in an attempt to earn foreign currency for the rogue state.
Between April and May 2022, Tornado Cash allegedly laundered hundreds of millions of dollars for Lazarus. According to the indictment, Storm and Seminov implemented changes to CoinMixer’s services during this period so that it could publicize its compliance with sanctions. However, in a private conversation, the two men agreed that these changes would not serve the practical purpose of stopping the money laundering taking place at Tornado Cash.
Mr. Storm and Mr. Seminov 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, each carrying a maximum sentence of 20 years in prison. The two have also been charged with conspiring to operate an unauthorized money transfer business, and will be sentenced to a maximum of five years in prison.
In a written statement, Brian Klein, an attorney for Storm and a partner at Waymaker LLP, expressed his client’s dissatisfaction with the charges. Klein wrote that the DOJ’s decision to arrest the client was “based on novel legal theories with dangerous implications for all software developers.” Storm has been cooperating with prosecutors’ investigations since last year and alleges involvement in criminal activity. Much more will come out of this story at trial. ”
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Tornado Cash is the second coin mixer to be shut down by US law enforcement this year. In March, US government agencies teamed up with Europol officials to take down a Vietnam-based chip mixer organization.by Department of JusticeChipMixer founder Minh Quốc Nguyễn claims $17 million in bitcoin from 37 ransomware-related transactions, plus $700 million stolen from cryptocurrency companies Aksi Infinity and Harmony by North Korean hackers. It was laundering more than a dollar.