Tornado Cash Founders Face US Charges for Handling $1B in Dirty Money

<p>Roman
Semenov and Roman Storm, the Founders of Tornado Cash, a cryptocurrency mixer,
have been charged with helping criminals, including hackers linked to North
Korea-linked Lazarus Group, to launder over $1 billion in illicit funds. Storm
was arrested today (Wednesday) in Washington by the Federal Bureau of
Investigation (FBI).</p><p>US Goes
After Tornado Cash Founders</p><p>A
cryptocurrency mixer, also known as a tumbler, is a service utilized by digital asset holders to maintain the anonymity of their cryptocurrency transactions. These
tumblers blend potentially traceable crypto assets with large amounts of
other funds.</p><p>The US
Department of Justice in <a href="https://www.justice.gov/opa/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations">a statement</a> released on Wednesday noted that it charged Semenov
and Storm with conspiracy to commit money laundering, sanctions violations, and to operate an
unlicensed money-transmitting business. According to the law enforcement
agency, the executives received complaints and calls for help from victims of
cybercrimes but deliberately avoided implementing any controls to stop using criminals from using its platform to launder illicitly obtained cryptocurrencies.</p><p>Furthermore,
the Founders through
their platforms allegedly helped Lazarus Group “to launder hundreds of millions
of dollars in hacking proceeds,” despite the fact that the hacking group had
been sanctioned by the US Department of the Treasury’s Office of Foreign Assets
Control (OFAC) as blocked property.</p><p>“Storm and
Semenov allegedly knew that the Tornado Cash service they were operating was
engaging in these sanctions-violating transactions,” US prosecutors explained.
“They implemented a change in the service so they could make a public
announcement that they were compliant with sanctions, but in their private
chats they agreed that this change would be ineffective.”</p><p>US Hits Roman
Semenov with Sanctions
Designation</p><p>Separately,
OFCA on Wednesday <a href="https://home.treasury.gov/news/press-releases/jy1702" target="_blank" rel="follow">issued a sanctions
designation</a> against
Semenov, thereby following up on a similar sanction <a href="https://home.treasury.gov/news/press-releases/jy1087" target="_blank" rel="follow">placed on Tornado Cash</a> last year. </p><p>The
designation means that Semenov’s assets in the United States are blocked, and
he is considered detrimental to the country's security. The label also bars US-based
and foreign organizations from engaging in financial transactions with the Co-Founder.</p><p>Last year,
OFCA issued its <a href="https://www.financemagnates.com/cryptocurrency/us-accuses-north-korea-of-cyber-fraud-sanctions-crypto-mixerblender/" target="_blank" rel="follow">first sanctions against
a cryptocurrency mixer</a>. The financial intelligence agency accused
Blender.io, another crypto tumbler, of laundering over $20.5 million in criminal
proceeds for the Lazarus Group. </p><p>Furthermore, the agency 2019 imposed similar sanctions on the Lazarus Group
after it accused the North Korea-linked hacking group of using Tornado Cash to
obscure the transfer of more than $455 million pilfered during the March 2022 <a href="https://www.financemagnates.com/cryptocurrency/news/ronin-network-suffers-615-million-crypto-heist/" target="_blank" rel="follow">breach of Axie
Infinity's Ronin Network</a>. It noted that the hack remains the largest crypto
heist so far. </p><p>“The
Lazarus Group subsequently used Tornado Cash to launder more than $96 million
of funds derived from the June 24, 2022, cyber-enabled heist on Harmony’s
Horizon bridge, and at least $7.8 million from the August 2, 2022, Nomad
heist,” OFAC explained. “This revenue provides the Democratic
People’s Republic of Korea with resources that it uses to support its unlawful ballistic missile
and nuclear weapons programs.”</p><p>Meanwhile,
the FBI has attributed <a href="https://www.financemagnates.com/cryptocurrency/fbi-traces-40m-in-stolen-btc-to-north-korea-linked-lazarus-group/" target="_blank" rel="follow">over $40 million worth
of Bitcoin (BTC) stolen this week</a> to Lazarus Group, <a href="https://www.financemagnates.com/" target="_blank" rel="follow">Finance Magnates</a> reported earlier today. The
security agency also said the hackers were responsible for major cyberattacks recorded in June 2023: the heist
of $60 million in digital assets from Alphapo, the $37 million stolen from
CoinsPaid, and a $100 million theft from Atomic Wallet.</p><p>MetaQuotes caps product activation; Swissquote's portfolios; <a href="https://www.financemagnates.com/forex/news-nuggets-23-august-metaquotes-caps-product-activation-swissquotes-portfolios/" target="_blank" rel="follow">read today's news nuggets</a>.</p>

This article was written by Solomon Oladipupo at www.financemagnates.com.