- Tornado Cash’s co-founders have been charged with money laundering and sanctions violations in the US, with one, Roman Storm, arrested
- Roman Semenov has been added to the OFAC’s specially designated nationals list for his involvement
- The investigation, involving various US agencies, has escalated concerns over Tornado Cash’s transaction privacy services
Two co-founders of Tornado Cash have been indicted for money laundering and sanctions violations by US federal authorities, according to prosecutors. One, Roman Storm, has been arrested on the charges while Roman Semenov remains at large, with Semenov also included in the Office of Foreign Assets Control’s (OFAC) list of specially designated nationals. The move comes just three days after an appeal against the Treasury Department’s authority to impose sanctions on Tornado Cash itself was rejected.
Tornado Cash Crackdown Goes Nuclear
Tornado Cash was sanctioned just over a year ago for its involvement in allowing criminal groups to launder their money, and the pair were yesterday accused of facilitating the laundering of more than $1 billion in illicit funds through the portal. Multiple US agencies, including the US Attorney for the Southern District of New York, US Attorney General Merrick Garland, the FBI, and the IRS’ criminal division, participated in the collaborative investigation.
The charges filed against Semenov and Storm include conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business.
While Storm was reportedly arrested, Semenov’s whereabouts remain unknown, with the Treasury also referencing the arrest in the Netherlands in August 2022 of Tornado Cash developer Alexey Pertsev on related money laundering charges.
Pair Knowingly Helped Hackers Launder Funds
This development marks a significant escalation in the US government’s efforts to scrutinize Tornado Cash, a platform designed to enhance transaction privacy through mixing pools. A lawsuit involving the Treasury and the company has been ongoing following its closure last year, with the authority winning an appeal filed against its decision this week. Semenov’s known email addresses and Ethereum wallet addresses have been made public on the OFAC list, but Storm was not subjected to OFAC sanctions.
US attorney Damian Williams stated that Storm and Semenov “knew that they were helping hackers and fraudsters conceal the fruits of their crimes,” which makes the potential punishment all the more severe were they to be found guilty.
The Treasury adds in its statement that the actions taken by the US government are intended to disrupt illicit funding activities, safeguard the financial system’s integrity, and protect the virtual currency ecosystem. These measures followed a recent court ruling that supported the Treasury’s position in a lawsuit involving Tornado Cash, allowing OFAC to impose sanctions on the entity.
This represents a notable move to individually sanction Semenov, distinguishing him from the broader company, and allows for potential appeals in the case.