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Tornado Cash Founders Charged With Money Laundering And Sanctions Violations

The last update of Tornado.cash's twitter account is on August 9th, 2022.

A press release of Southern New York Attorney's Office announced that Roman Storm and Roman Semenov, co-founders of the cryptocurrency mixer Tornado Cash, have been charged with conspiracy to commit money laundering, sanctions violations, and operating an unlicensed money transmitting business.

Besides that, U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Roman Semenov, as stated in a press release.
The charges stem from their alleged creation and operation of Tornado Cash, which facilitated over $1 billion in money laundering transactions, including laundering hundreds of millions of dollars for the sanctioned North Korean cybercrime organization, Lazarus Group.Roman Storm has been arrested in Washington and will appear in the U.S. District Court for the Western District of Washington. However, Roman Semenov remains at large.

The case has been assigned to U.S. District Judge Katherine Polk Failla.According to U.S. Attorney Damian Williams, Tornado Cash was a notorious cryptocurrency mixer that knowingly helped hackers and fraudsters conceal the proceeds of their crimes. He emphasized that money laundering through cryptocurrency transactions is illegal and those who engage in such activities will face prosecution.

Attorney General Merrick B. Garland warned criminals who think they can use cryptocurrency to hide their identities and crimes that the Justice Department will find and hold them accountable. He pointed out that the defendants operated a $1 billion scheme to help other criminals launder funds, including a state-sponsored North Korean cybercrime group that violated U.S. sanctions.

FBI Director Christopher A. Wray stated that the announcement should serve as a reminder to criminal organizations worldwide that they are not untraceable or anonymous. He highlighted that those charged facilitated money laundering for cybercriminals, including a North Korean cybercrime organization evading sanctions. The FBI is committed to dismantling the infrastructure used by cybercriminals and holding anyone who assists these criminals accountable.The indictment alleges that Tornado Cash was used to launder more than $1 billion in criminal proceeds.

The defendants implemented the core features of the service, promoted it, and made substantial profits from its operation. Despite receiving complaints and requests for help from victims of hacking and cybercrimes, they continued to facilitate money laundering transactions without implementing any controls.

In April and May 2022, the Tornado Cash service was allegedly used by the Lazarus Group to launder hundreds of millions of dollars in hacking proceeds. The defendants knew about these transactions and even made a public announcement claiming compliance with sanctions, but they privately acknowledged that their change would be ineffective. They continued to operate the service and facilitate further sanctions-violating transactions. Roman Storm, a 34-year-old from Auburn, Washington, has been arrested, while Roman Semenov, a 35-year-old Russian national, remains at large.

They each face charges that carry a maximum sentence of 20 years in prison for conspiracy to commit money laundering and conspiracy to violate the International Economic Emergency Powers Act. Additionally, they are charged with conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison.The case is being handled by the Office's Money Laundering and Transnational Criminal Enterprises Unit and the Criminal Division's National Cryptocurrency Enforcement Team (NCET).

These efforts are aimed at combating the illicit use of cryptocurrencies and digital assets, with a focus on investigating and prosecuting crimes involving virtual currency exchanges, mixing and tumbling services, and infrastructure providers. It's important to note that the allegations in the indictment are accusations, and the defendants are presumed innocent until proven guilty.

An important lesson learned here: Do not go against the Big Bro - the Government, especially the US one.

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