The two founders behind Tornado Cash, a Russian cryptocurrency mixing service, have been charged by the U.S. Attorney’s Office for the Southern District of New York, according to a statement on Wednesday.
Roman Storm and Roman Semenov were officially charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations and conspiracy to operate an unlicensed money transmitting business, according to a newly unsealed indictment.
Storm was arrested in Washington on Wednesday but Semenov still remains at large, the SDNY stated. The third co-founder, Alexey Pertsev, who is not mentioned in the filing, is facing legal repercussions in Amsterdam over his role in Tornado Cash.
Mixers allow customers to conceal the origin of their crypto funds when transacting in exchange for a fee. While the blending could be used by good actors (who may just want privacy when moving funds), it also allows for potentially tainted crypto funds to be less identifiable.
Tornado Cash was created in 2019 based on open source research by the team behind Zcash, according to its website. Semenov, emphasized the platform’s decentralized nature, saying in a January 2022 interview with CoinDesk that the protocol was specifically created to be “unstoppable” and added, “there is not much we can do in terms of helping investigations because the team doesn’t have much control over the protocol.”
“While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes,” U.S. Attorney Damian Williams said in a statement Wednesday.
The charges derived from Tornado Cash operating a platform that had over $1 billion in alleged money laundering transactions, the SDNY said. That includes over $455 million stolen by the Lazarus Group, a North Korean cybercrime organization, according to a statement last year from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
In August 2022, OFAC sanctioned Tornado Cash for its role in enabling over $7 billion in crypto to be laundered through its platform. From that point forward, U.S. citizens and businesses were prohibited from using its service.
Alongside the SDNY, Wednesday’s charges included participation from the Federal Bureau of Investigation, the Justice Department and the Internal Revenue Service’s Criminal Investigation unit.
