The United States has charged two cofounders of the cryptocurrency mixer Tornado Cash with money laundering and other crimes a year after authorities banned the Russian-founded platform over its alleged support of North Korean hackers.
Roman Semenov and Roman Storm have been charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business, the US justice department said in a statement on Wednesday.
Storm, a naturalised US citizen, was arrested in Washington state on Wednesday. Semenov, a Russian national, has yet to be taken into custody.
Alexey Pertsev, a third cofounder, was arrested in the Netherlands in August last year on money laundering charges.
US officials have accused Tornado Cash, which was sanctioned by the US treasury last year, of facilitating more than $1bn in money laundering transactions and laundering hundreds of millions of dollars for the hacking outfit Lazarus Group, which has been implicated in funding North Korea’s nuclear weapons programme.
“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,” US Attorney Damian Williams said.
“Today’s indictment is a reminder that money laundering through cryptocurrency transactions violates the law, and those who engage in such laundering will face prosecution.”
Separately, the US treasury announced sanctions against Semenov for his alleged support of Lazarus Group.
Crypto mixing services like Tornado Cash, which was launched in 2019, allow crypto users to conceal the origins of their funds by mixing various assets in exchange for a fee. Mixing services can be used by both ordinary users concerned about privacy and criminal actors seeking to hide ill-gotten gains.
Crypto advocates have strongly criticised the ban on Tornado Cash as an overreach that infringes on people’s legitimate expectations of privacy.
Brian Klein, a lawyer representing Storm, said he was disappointed that his client had been charged for helping to develop software “based on a novel legal theory with dangerous implications for all software developers”.
“Mr Storm has been cooperating with the prosecutors’ investigation since last year and disputes that he engaged in any criminal conduct,” Klein said. “There is a lot more to this story that will come out at trial.”
Semenov’s legal representatives could not be reached for comment. Pertsev’s lawyer did not immediately respond to a request for comment.
Source: Al Jazeera
BDST: 1010 HRS, AUG 24, 2023
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