Federal Government Accuses Tornado Cash Crypto Mixer Developers of Money Laundering


Two of the original developers of crypto mixer Tornado Cash are caught in a brand new federal indictment storm. Wednesday, tThe United States alleged that two of the original developers, Roman Storm and Roman Semenov, helped crypto criminals launder millions of crypto at a time. helping to highlight the “anonymous” nature of illicit transactions.

TThe U.S. Attorney’s Office for the Southern District of New York has unsealed a new charge alleging that two of the mixer’s original developers conspired to violate sanctions and help hackers launder more than $1 billion in crypto. Prosecutors said police arrested Storm in his home state of Washington on Wednesday. Semenov, a Russian national, is currently at large.

In a statementU.S. Attorney Damian Williams said that although Tornado Cash’s developers publicly claimed to “offer a technically sophisticated privacy service,” they “actually knew they were helping hackers and fraudsters hide the proceeds of their crimes.” .

The United States claimed in its indictment that Storm and Semenov “knew that (Tornado Cash) was a safe haven for criminals to engage in large-scale money laundering and evade sanctions.” The couple would have worked with a character called “CC-1”, who is probably Alexey Pertsev. Pertsev is currently working to combat similar problems money laundering charges alleged by prosecutors in the Netherlands. Pertsev was released from prison in April this year after his arrest in 2022, and he is still trying to clear his name. Pertsev is currently awaiting trial

A cryptocurrency mixer is essentially a large pool into which cryptocurrency users can place their tokens.. The crypto is mixed, then redistributed to all users up to the initial amount they invested, minus any fees charged by the mixer. Originally established in 2019, Tornado Cash primarily ran on the Ethereum blockchain, with most transactions transacted in ETH. The more people using the service, the more their crypto could be anonymized.

The federal government alleged that Tornado Cash operated without truly knowing its customer. or an anti-money laundering system. In the indictment, prosecutors claimed that all money transfers businesses, “including businesses engaged in the transmission of cryptocurrencies,” must register with the DOT’s Financial Crimes Enforcement Network, AKA FinCEN. Although Tornado Cash operated in the United States through relays, U.S. prosecutors said Storm and Semenov did not register with the agency.

More than that, the federal government says the founders regularly discussed Complaints from crypto users that hacked funds were being anonymized through their mixer. The indictment describes twice that crypto exchanges contacted Tornado Cash about anonymizing the hacked funds, but that the developers “refused to offer any assistance.”

Tornado Cash was just one of many mixers available, but the The federal government particularly targeted Tornado Cash because it was where major crypto hackers hid their stolen tokens. THE The United States sanctioned Tornado Cash last year alleging that the mixer acted as a one-stop shop for money laundering. The US Treasury Department claimed that the Lazarus Group, a hacking network affiliated with the North Korean government, used Tornado Cash to hide its ill-gotten gains. The FBI linked the Lazarus Group to the $615 million hack from the Ronin network last year.

The federal government alleged that the developers of Tornado Cash attempted to mislead the public about their ownership and control over Tornado Cash. Prosecutors said Storm once claimed in an interview that Tornado Cash was a “nonprofit” business, but the developer presented the company as a business to American investors.

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