US Charges Tornado Cash Founders With Sanctions Violations, Listing One
DOJ this week indicted two co-founders of virtual currency mixer Tornado Cash, which it said facilitated more than $1 billion in money laundering transactions for the Lazarus Group, the sanctioned North Korean cybercrime organization. The agency said Roman Storm of Auburn, Washington, and Russian national Roman Semenov knowingly conspired to violate U.S. sanctions.
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The Treasury Department also sanctioned Semenov. The agency said Semenov knew Tornado Cash was being used to launder “large volumes of stolen virtual currency” for the Lazarus Group and worked to “increase the anonymity” of the service to allow those activities to continue. Treasury sanctioned Tornado cash last year 2208080031).
Storm and Semenov, two of the three co-founders of Tornado Cash, created the service to allow users to “engage in untraceable transfers of cryptocurrency,” DOJ said, adding that they didn’t implement know-your-customer or anti-money laundering programs “as required by law.” Lazarus Group used Tornado Cash in April and May 2022 to launder “hundreds of millions of dollars in hacking proceeds,” DOJ said.
Soon after, Storm and Semenov made a “change” to the Tornado Cash service and publicly announced “they were compliant with sanctions,” DOJ said. But “in their private chats, they agreed that this change would be ineffective.” The agency said they continued to operate Tornado Cash and ‘facilitate hundreds of millions of dollars in further sanctions-violating transactions, helping the Lazarus Group to transfer criminal proceeds.”
Both founders “turned a blind eye to the illicit activity and made public representations that they were compliant with sanctions laws,” FBI Assistant Director in Charge James Smith said. Matthew Olsen, DOJ’s assistant attorney general for national security, said the agency will “use every tool in our arsenal to pursue and dismantle the criminal networks that enable U.S sanctions violations wherever they operate.”
Storm and Semenov each were charged with one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Emergency Economic Powers Act, which each carry a maximum 20-year prison sentence. Each also is charged with conspiracy to operate an unlicensed money transmitting business, which carries a maximum five-year prison sentence.