Roman Storm, a U.S. national, and Roman Semenov of Russia are the creators and promoters of Tornado Cash, investigators alleged. The U.S. Attorney's Office for the Southern District of New York charged them with conspiracy to commit money laundering, operating an unlicensed money transfer business, and sanctions violations.
Founded in 2019, Tornado Cash offered anonymous and untraceable financial operations without implementing the anti-money laundering programs required by law. This proved to be the ideal environment for criminal wrongdoings.
“As alleged, Tornado Cash was an infamous cryptocurrency mixer that laundered more than $1 billion in criminal proceeds and violated U.S. sanctions,” U.S. Attorney Damian Williams said. “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.”
Storm was arrested Wednesday in Washington, while Semenov is still at large.
“Cryptocurrency mixers have become the go-to method for criminals to conceal their ill-gotten gains. As alleged, the defendants operated Tornado Cash as a safe haven for criminal actors to obfuscate the trail of funds tied to their criminal activities, such as computer hacking and wire fraud,” said Acting Assistant Attorney General Nicole M. Argentieri.
Tornado Cash was previously sanctioned in August last year by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) for laundering more than $7 billion worth of virtual currency since its foundation, including over $455 million stolen by the Lazarus Group.
The North Korean-backed hacking organization was similarly blacklisted by OFAC in 2019 for conducting multiple cyberattacks sponsored by Pyongyang. Investigators allege Lazarus Group used the Tornado Cash service to launder the proceeds from its 2022 cybercrime operations.
Both Storm and Semenov knew of Tornado Cash's illicit transactions made on behalf of cybercriminals, but only took superficial actions that appeared to comply with sanctions but in reality were acknowledged by the duo as useless, authorities said.
“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. Today’s indictment is a reminder that money laundering through cryptocurrency transactions violates the law, and those who engage in such laundering will face prosecution,” Williams said.
Matthew Miller, a U.S. State Department spokesperson, said that the ultimate purpose behind North Korea’s aggressive cybercrime campaign is to finance its ballistic missile and nuclear weapons programs.
“Today’s actions demonstrate the United States’ commitment to protecting the integrity of our financial system, including the virtual currency ecosystem, and to disrupting the ability of the DPRK to raise funds through illicit activity,” Miller said.