July 21, 2024
Tornado Cash Founders Accused of Money Laundering and Violating Sanctions
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Tornado Cash Founders Accused of Money Laundering and Violating Sanctions

According to authorities, two Tornado Cash co-founders were accused on Wednesday of violating US federal money laundering laws and penalties.

Roman Semenov, one of the co-founders, was additionally put on the list of specially designated nationals maintained by the Office of Foreign Assets Control.

According to a statement released by several US authorities on Wednesday, Semenov and his business partner Roman Storm were both found to have been involved in the laundering of more than $1 billion in “criminal proceeds” via the mixing service.

The statement lists the US Attorney for the Southern District of New York, US Attorney General Merrick Garland, and the FBI as participants in the extensive probe. Additionally, the criminal unit of the IRS was involved.

The decision to add both to OFAC’s list signalled a step up in US investigations into Tornado Cash, which aims to maintain transaction secrecy by utilizing mixing pools. The Treasury has been the target of litigation.

Semenov’s known email addresses and Ethereum wallet addresses were listed by OFAC.

Storm, who, according to the prosecution, was detained on Wednesday, was not subject to an OFAC sanction. Semenov’s location was unknown. The Treasury said that a third co-founder was neither punished nor penalized, however, Alexey Pertsev was “arrested on related money laundering charges in the Netherlands in August 2022 by Dutch law enforcement authorities.”

A list of targeted people and businesses that have either been owned or controlled by firms that the US has active sanctions against is made available by OFAC. The list makes sure that the corresponding assets are frozen and that “US persons” are not allowed to interact with or transact with them.

“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 stated in a statement.

Indictments against the two included conspiracy to launder money, conspiracy to violate sanctions, and conspiracy to run an unauthorized money-transfer operation.

In addition, the prosecution brought up claims that Tornado Cash had connections to a North Korean hacker group.

“Even after they knew the Lazarus Group was laundering hundreds of millions of dollars’ worth of stolen virtual currency through their mixing service for the benefit of the Kim regime, Tornado Cash’s founders continued to develop and promote the service and did not take meaningful steps to reduce its use for illicit purposes,” stated Deputy Secretary of the Treasury Wally Adeyemo in a statement.

After a judge on August 18 sided with the Treasury in the Tornado Cash action, where petitioners attempted to argue that OFAC overstepped in its penalties against the cryptocurrency mixer, the DOJ filed charges and OFAC imposed sanctions. The action taken by OFAC on Wednesday is the first significant step toward sanctioning Semenov personally rather than Tornado Cash as a business.

The verdict keeps the petitioner’s right to appeal intact.

Tornado Cash received a sanction from the office in 2022 after it asserted that hackers had been able to launder $7 billion in cryptocurrency holdings. It adds 45 Ethereum wallet addresses specifically.

Despite being decentralized, the judge presiding over the case determined that Tornado Cash could be sanctioned as an entity and as such fell under OFAC’s authority.

The judge specifically stated, “The entity is composed of its founders, developers, and its DAO.”

Image: Wallpapers.com

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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