US Charges Tornado Cash Developers With Laundering $1 Billion Of Crypto Assets, Sanctions Violations

Two Tornado Cash developers were charged with money laundering and sanctions violations.

The US Department of Justice says the developers, Roman Storm, and Roman Semenov, aided in laundering more than $1 billion worth of crypto assets for the North Korean hacker entity known as Lazarus Group.

Tornado Cash is a crypto mixer that hides the origin of funds laundered through it. The Office of Foreign Asset Control (OFAC) sanctioned the tool last year.

The sanctions were imposed amid allegations that the Lazarus hacker group laundered stolen crypto assets from multiple crypto hacks using this tool.

The DoJ has already arrested Storm, while OFAC has sanctioned Semenov.

The sanctions also apply to eight Ethereum wallet addresses owned by Semenov. According to US Attorney Damien Williams, the two knowingly enabled money laundering.

The US Attorney said,

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.

Tornado Cash Developer Charged for Developing Software, Attorney Says

Storm’s attorney, Brian Klein, has criticized the charges, saying that his client was being charged for developing software.

The attorney noted that the authorities had significant implications for all software developers. He also added that Storm has worked with the prosecutors since last year.

The DoJ said that Storm and Semenov created Tornado Cash with many privacy features despite the possibility that the software could be used illegally.

The indictment also said that the two had control over Tornado Cash and could have chosen to adopt transaction monitoring and other anti-money laundering features.

Another Tornado Cash developer, Alex Pertsev, was arrested in 2020 in the Netherlands and is awaiting trial over money laundering charges.

The DoJ alleged that the three co-founders made false, misleading statements to downplay their control of Tornado Cash.

North Korean Hackers Target the Crypto Industry

North Korean state-sponsored hackers have launched several hacking campaigns against the cryptocurrency industry.

In these hacking campaigns, the hackers have stolen billions of dollars worth of crypto assets, which reports say were used to fund the country’s missile program.

A recent TRM Labs report said North Korean hackers had stolen more than $2 billion worth of cryptocurrencies over the last five years.

These crypto assets were stolen across 30 cyberattacks, showing that the hackers have been active in this sector.

The US Federal Bureau of Investigations recently flagged six Bitcoin wallet addresses owned by the North Korean hackers.

The six flagged wallets currently hold 1,580 BTC worth around $40 million.

According to the FBI, the activity on these addresses showed that the hackers planned to sell the assets.

While code vulnerabilities in platforms and protocols made it easy for hackers to target the industry, laundering the stolen funds has always been problematic for criminals.

Blockchain runs under a public ledger that makes it possible to track the movement of funds.

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