Roman Storm and Roman Semenov have both been charged with money laundering, sanctions violations, and running an unauthorized money transfer firm as part of a larger conspiracy. On Wednesday, an indictment charging two of the founders of the now-banned Tornado Cash cryptocurrency mixer service with laundering over $1 billion in illicit proceeds was released by the U.S. Justice Department.
According to reports, Storm, 34, was detained in Washington, United States. Still at large in Dubai is 35-year-old Semenov. “Made millions of dollars in profits” is a claim made about them because of their work advertising and running the business. Over the course of three years, Tornado Cash is expected to have handled more than $7 billion worth of crypto assets. Days after a U.S. court ruled that Tornado Cash is a separate organization that can be sanctioned, the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department sanctioned Semenov and eight bitcoin addresses associated to him.
Tornado Cash was allegedly run by Roman Storm and Roman Semenov, who “knowingly facilitated this money laundering,” according to U.S. Attorney Damian Williams. As the article puts it, “while publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes.” “The eight addresses have processed over $11.5 million in various crypto assets, including TORN, Tornado Cash’s governance token,” Elliptic explained. It has been reported that “funds from these addresses have moved to various services, including both centralized and decentralized exchanges.”
Tornado Cash, a decentralized cryptocurrency mixer service, was launched in 2019 with the goal of making it more difficult to trace the origins and owners of individual cryptocurrency transactions. The goal is to make the transactions anonymous and hard to trace so that criminals are more likely to use them to launder money. Two of the three original creators of Tornado Cash have been named as defendants. Alexey Pertsev, the third co-founder, was arrested in the Netherlands in August and is now awaiting trial on charges of money laundering. Tornado Cash is also accused of not having enough Know Your Customer (KYC) or anti-money laundering processes in place. Neither was it recognized as a money transfer business by the U.S. Financial Crimes Enforcement Network (FinCEN).
The Department of Justice has also accused Tornado Cash of assisting sanctions violations by helping to launder hundreds of millions of dollars for the Lazarus Group in April and May 2022. The U.S. Treasury Department placed penalties on Tornado Cash a year ago, charging the platform of giving “material support” to the hacking gang and laundering over $500 million stolen in attacks of Axie Infinity and Harmony Horizon Bridge. It’s important to remember that OFAC imposed sanctions on the Lazarus Group on September 13, 2019. Recently, North Korea has gained notoriety for its blatant heists of prominent cryptocurrencies, the subsequent laundering of those funds through mixing services like Tornado Cash and Sinbad, and the subsequent re-injection of those cash into the country to finance the regime’s nuclear and missile development programs.
According to Chainalysis, a blockchain analytics firm, $3.8 billion was stolen from businesses in 2022 due to crypto-related hacking, with approximately $1.7 billion blamed on attacks perpetrated by the Lazarus Group. More than a dozen bitcoin owners were defrauded and extorted in a plot that included 26-year-old American Anthony Francis Faulk (aka “shade”), who was recently sentenced for his role in the scheme. A 36-month prison sentence and over $3 million in restitution are in store for him.
