Roman Shtorm was arrested in Washington, Alexey Pertsev was arrested in the Netherlands, Roman Semyonov was charged in absentia by the US Department of Justice
The creators of the Tornado Cash cryptomixer were pressed for laundering more than $1 billion
The US Department of Justice has accused the two founders of the Tornado Cash cryptocurrency mixer, Roman Shtorm and Roman Semyonov, of helping criminals (including the North Korean gang Lazarus) launder more than $1 billion in stolen cryptocurrencies. Storm was arrested in Washington, and Semyonov was charged in absentia.
Let me remind you that back on August 8, 2022, the US Office of Foreign Assets Control (OFAC) stated that in total, more than $ 7 billion was laundered through Tornado Cash, created in 2019, and its operators could not or did not want to enter ” effective controls designed to prevent money laundering on a regular basis.”
Tornado Cash is a blockchain protocol that runs on the Ethereum network. It allows you to increase the confidentiality of transactions by hiding the connection between the source and recipient of tokens. The service is often used by hackers when withdrawing funds from attacked projects. 49-year-old Russian citizen Semyonov lived in Washington. According to investigators, he, along with 34-year-old Storm from Auburn, created a scheme “designed to help other scammers launder funds using cryptocurrency.” “Storm and Semyonov actually knew they were helping hackers and scammers hide the fruits of their crimes,” Damian Williams, U.S. Attorney for the Southern District of New York, said in a report.
As a result, sanctions were imposed against the mixer service: all property and property interests of Tornado Cash (located in the USA or owned or controlled by persons from the USA) turned out to be blocked, they now need to be reported to OFAC. Also, US citizens and others in the United States are no longer able to do business with Tornado Cash without special permission from OFAC. In addition, any organizations that are directly or indirectly owned by such people by 50 percent or more were also “banned”.
In fact, an autonomous smart contract was included in the sanctions list (which now raises a lot of questions from lawyers), and the website, forum, Discord server, and even the Tornado Cash GitHub repository have ceased their work.
The authorities claimed that the sanctions were due to the fact that funds stolen by hackers as a result of the Harmony hack (about $ 96 million) passed through Tornado Cash, funds received as a result of the compromise of the Ronin blockchain, which is closely associated with the popular NFT game Axie Infinity (more than 600 million dollars, 455 million was laundered through the mixer), as well as about 7.8 million dollars received during the compromise of the Nomad cryptocurrency bridge.
As now reported by the US Department of Justice, one of the founders of the mixer, 34-year-old Roman Storm, was arrested last Wednesday in the state of Washington, where he lives. The other defendant, 35-year-old Roman Semyonov, a Russian citizen, remains at large. The Office of Foreign Assets Control has announced sanctions against Semyonov for providing support to the North Korean government.
Storm and Semyonov are believed to have founded Tornado Cash in 2019 with Aleksey Pertsev, who was arrested in the Netherlands last August on money laundering charges.
Both men are charged with conspiracy to commit money laundering and conspiracy to violate the International Economic Emergency Powers Act. The maximum penalty for each of these charges is 20 years in prison. Also, the founders of Tornado Cash are accused of conspiring to run an unlicensed money transfer business, and the maximum penalty in this case is up to five years in prison.
“Even after [создатели Tornado Cash] learned that the Lazarus group was laundering hundreds of millions of dollars of stolen virtual currency through their mixer service, the founders of Tornado Cash continued to develop and promote the service and did not take meaningful steps to reduce its use for illegal purposes, ”says Deputy Secretary of the Treasury Wally Adeyemo (Wally Adeyemo).
“By publicly claiming to offer a technically sophisticated privacy service, Storm and Semyonov actually knew they were helping hackers and scammers hide the fruits of their crimes,” said Attorney Damian Williams. “Today’s allegations are a reminder that money laundering through cryptocurrency transactions is against the law and those who engage in such laundering will be held accountable.”
I am reading the materials of the criminal case of two Romanovs (Storm and Semenov), who created Tornado Cash, a popular mixing platform for exchanging, and often laundering, crypto stolen by hackers. Both are from Russia. Roman Storm graduated from South Ural State University and then moved to the USA, where he worked as a programmer for a long time.
In correspondence with accomplices, with whom Roman created the site, he writes: “We must remember that secret (private) chats in the application (most likely meaning Telegram) are read by law enforcement agencies and can then be used against us.” Of course, the FBI read these chats and knew how they laundered the money of hacker groups. “The mice cried, pricked, but continued to gnaw on the cactus.” The question is rather rhetorical, how does the FBI get access to secret Telegram chats?