Tornado Cash Founders Face Court over “Assisted Laundering”

The charges may lead to potential confiscation of assets belonging to Tornado Cash users.

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  • Tornado Cash founders face allegations of money laundering.
  • The U.S. Justice Department links the crypto mixer to the infamous Lazarus group 2022 heist.
  • The charges may lead to potential confiscation of assets belonging to Tornado Cash users.

The cryptocurrency industry has witnessed an alarming surge in high-profile cyberattacks in the last year, resulting in losses exceeding $3.6 billion. Tornado Cash, a privacy-focused virtual currency mixer, has gained significant attention for its frequent adoption by hackers to conceal traces of their illicitly acquired funds. Previously sanctioned in August 2022 by the U.S. Department of Treasury, new allegations have triggered renewed focus on the protocol.

Charges Against Tornado Cash Co-Founders

On Wednesday, 23 August 2023, the U.S. Department of Justice unveiled charges against two of Tornado Cash’s principal co-founders, Roman Storm and Roman Semenov, for allegedly facilitating money laundering of more than $1 billion in illegal transactions. The Federal Bureau of Investigation (FBI) arrested Storm in Washington State the same day.

The duo was charged with conspiracy to violate sanctions and operate an unlicensed money-transmitting business. The two face a prison sentence of up to twenty years if proven guilty. 

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The charges are not Tornado Cash’s first run-in with U.S. authorities. Earlier in 2023, the privacy mixing protocol faced suspension for its use in moving crypto funds.

Tornado Cash Ties to North Korean Hackers 

On August 8th, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash for facilitating one of the largest cryptocurrency heists in history.

According to the indictment, Tornado Cash was used to launder more than $455 million stolen by North Korean state-sponsored hackers, Lazarus Group

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According to the DOJ, Tornado Cash knowingly enabled and played a pivotal role in major cybercrime and other thefts, thereby violating regulatory sanctions. The same month, the U.S. Treasury Department blacklisted the crypto mixer, halting its regional operations. The ban was lifted later that year, permitting the protocol to resume operations as normal.

On the Flipside

  • Tornado Cash’s third co-founder, Alexey Pertsev, was arrested by Dutch Law Enforcement Authorities in August 2022 and is still awaiting trial on similar counts.
  • The impact of the charges and allegations against Tornado Cash could potentially result in one of the largest Bitcoin seizures in crypto history if users’ assets are compromised.

Why This Matters

As authorities continue to crack down on the role of cryptocurrency in facilitating illegal financial transactions, the arrest of the Tornado Cash founders carries far-reaching consequences for the broader crypto ecosystem.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Grace Abidemi

Grace Abidemi, a cryptocurrency reporter at DailyCoin, covers industry developments and trends. She previously worked as a freelance writer. With a Bachelor's degree in German Language and certifications in marketing and storytelling, Grace creates engaging content. When not working, she's in Nigeria, mastering cooking and canvas painting, and enjoys learning about different cultures and languages.