Founders of crypto-mixer Tornado Cash in the U.S. accused of laundering $1 bln

Founders of crypto-mixer Tornado Cash in the U.S. accused of laundering $1 bln

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Author: Robert Strickland (crypto-journalist)
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Founders of crypto-mixer Tornado Cash in the U.S. accused of laundering $1 bln

The founders of crypto-mixer Tornado Cash Roman Semenov and Roman Storm have been charged in the United States with laundering $1 bln



Roman Storm was arrested on August 23 in Washington state, and Roman Semenov was charged in absentia

The founders of cryptomixer Tornado Cash Roman Semenov and Roman Storm were charged by the US Department of Justice with laundering more than $1 billion in proceeds of crime.

Tornado Cash is a blockchain protocol running on the Ethereum network. It allows to increase the confidentiality of transactions by hiding the connection between the source and the recipient of tokens. The service is often used by hackers to withdraw funds from attacked projects.

Semyonov, a 49-year-old Russian citizen, lived in Washington, DC. According to the investigation, he, along with 34-year-old Storm from Auburn, created a scheme "designed to help other fraudsters launder funds using cryptocurrency." Of the $1 billion, some of the funds were intended for hackers from the North Korean group Lazarus, the DOJ report specified.

"Storm and Semenov actually knew they were helping hackers and fraudsters hide the fruits of their crimes," said Damian Williams, U.S. Attorney for the Southern District of New York in the report.

Storm was arrested Aug. 23 in Washington state and Semenov was charged in absentia, Williams specified.

Roman Semenov has been added to the list of individuals and legal entities against whom assets may be blocked, they are also prohibited from doing business with US citizens. The Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC) announced the inclusion of Roman Semenov in the list of companies and individuals subject to special sanctions.

On April 5, a group of individuals filed a motion for summary judgment in a case against the U.S. Treasury Department to lift sanctions on the cryptocurrency protocol.

In August 2022, the U.S. Department of the Treasury imposed sanctions against Tornado Cash. The agency's division, the Office of Foreign Assets Control (OFAC), placed the cryptocurrency protocol and associated digital wallet addresses on the sanctions watchlist (SDN). According to U.S. authorities, more than $7 billion in illicit cryptocurrency proceeds have been laundered through this mixing service since its inception in 2019.

In September, six people, including Coinbase exchange representatives Tyler Almeida and Nate Welch, appealed OFAC's decision. In their opinion, the agency exceeded its authority, and its actions violated the First Amendment of the U.S. Constitution on freedom of speech. Defendants in the lawsuit named the U.S. Treasury Department, its head Janet Yellen, OFAC, and its head Andrea Gaki. At the same time, the court upheld the sanctions of the US Department of Finance against the crypto mixer.

In August 2022, the alleged developer of Tornado Cash, Russian citizen Alexey Pertsev, was arrested in Amsterdam. He is also accused of laundering funds through the service, he denies it. His trial will begin in 2024.

 

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