(The Center Square) – A Washington state man and a Russian national – co-founders of cryptocurrency giant Tornado Cash – have been charged with operating a crypto scheme that allegedly laundered money for North Korean hackers, according to a federal indictment in the Southern District Court of New York.
The unsealed indictment alleges Roman Storm, a 34-year-old from Auburn, Washington, and Roman Semenov, a 49-year-old from Russia, of using their company to launder funds in what is known as a crypto-mixer. A mixer, or tumbler, is a service that mixes different streams of potentially identifiable cryptocurrency. This improves the anonymity of transactions by making cryptocurrency harder to trace.
“As alleged in the indictment, the defendants operated a $1 billion scheme designed to help other criminals launder and conceal funds using cryptocurrency, including by laundering hundreds of millions of dollars on behalf of a state-sponsored North Korean cybercrime group sanctioned by the U.S. government,” said Attorney General Merrick B. Garland in a Wednesday news release announcing the charges.
The Office of Foreign Asset Control’s FAQ section on the U.S. Department of the Treasury’s website mentions Tornado Cash.
“While engaging in any transaction with Tornado Cash or its blocked property or interests in property is prohibited for U.S. persons, interacting with open-source code itself, in a way that does not involve a prohibited transaction with Tornado Cash, is not prohibited,” the relevant section reads, making a distinction between legitimate and illegitimate uses of the open source Tornado Cash codebase.
That means writing about, linking to, or academic research with the code base or the domain name, should it come back online, would not be considered prohibited.
The federal government alleges the Tornado Cash service laundered “more than $1 billion in criminal proceeds,” and that “Storm and Semenov allegedly knew about these money laundering transactions.” The news release goes on to say that despite multiple complaints and requests from cybercrime victims, the company “refused to implement any controls and continued to operate the Tornado Cash service and facilitate these money laundering transactions.”
Storm and Semenov are charged with one count of conspiracy to commit money laundering, one count of conspiracy to violate the International Economic Emergency Powers Act and one count of conspiracy to operate an unlicensed money transmitting business.
The first two charges each carry a maximum penalty of up to 20 years in prison, and the third up to 5 years.
