Tornado Cash Creators Accused of Money Laundering and Violating Sanctions
In Brief
Roman Storm and Roman Semenov, developers of the privacy mixer Tornado Cash, have been charged with money laundering and sanctions violations.
The cryptocurrency mixer developed by the company allegedly enabled the laundering of more than $1 billion, with considerable sums flowing to groups like North Korea’s hacker organization Lazarus Group.
Roman Storm and Roman Semenov, developers of the privacy mixer Tornado Cash, have been charged with money laundering and sanctions violations.
The cryptocurrency mixer developed by the company allegedly enabled the laundering of more than $1 billion, with considerable sums flowing to groups like North Korea’s hacker organization Lazarus Group.
U.S. Attorney Damien Williams reportedly believes that the developers comprehended their technology’s exploitation by cybercriminals to obscure the unlawful sources of their profits.
The allegations encompass the awareness that Tornado Cash had been utilized for laundering gains originating from cybercrimes, with specific mention of hacks on platforms like KuCoin, BitMart, and Axie Infinity.
Roman Storm has already been apprehended by the Department of Justice (DOJ), while Semenov and eight Ethereum addresses under his authority have been sanctioned by the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC).
Brian Klein, an attorney representing Storm, highlighted a “novel legal theory” as the foundation of the charges. The attorney characterized Storm’s role primarily as that of a software developer, rather than an active participant in the illicit activities facilitated by Tornado Cash.
“We are incredibly disappointed that the prosecutors chose to charge Mr. Storm because he helped develop software, and they did so based on a novel legal theory with dangerous implications for all software developers,” said Brian Klein. “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.”
The charges are linked to co-founder Alexey Pertsev, who was arrested in the Netherlands last year and currently awaits trial for money laundering. Pertsev’s involvement underscores the project’s collaborative nature and emphasizes the difficulty of attributing individual responsibility in decentralized ventures.
This case highlights the challenges of completely halting platforms like Tornado Cash. Despite the U.S. Treasury blacklisting the service in August 2022, its decentralized structure enables continued operation despite sanctions.
Amid legal complexities, the recent arrests raise ongoing questions about the scope of crypto regulations. These arrests closely followed a federal judge’s validation of OFAC’s authority to impose sanctions on Tornado Cash.
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About The Author
Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
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Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
