Tornado Cash once again lands in hot water, this time over money laundering charges.
The founders of Tornado Cash, a virtual currency mixer, were charged with laundering more than $1bn.
U.S. Attorney's Office announced that the charges against Roman Storm and Roman Semenov include conspiracy to commit sanctions violations and money laundering and operating an unlicensed money transmitting business. Roman Storm was arrested on August 23rd.
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According to the released statement, the cryptocurrency mixer laundered hundreds of millions of dollars for the Lazarus Group, a cybercrime organization that has deep connections with North Korea. The co-founders reportedly knew of the issue but did nothing to stop it.
U.S. Attorney Damian Williams said:
As alleged, Tornado Cash was an infamous cryptocurrency mixer that laundered more than $1 billion in criminal proceeds and violated U.S. sanctions. <...> 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.
According to the attorney, the co-founders claimed to operate a privacy service, but they knew they were helping hackers hide their crimes.
The Tornado Cash service reportedly offered users untraceable and anonymous financial transactions, but the founders failed to implement “know your customer or anti-money laundering programs as required by law.”
However, Coin Center, a crypto advocacy group, criticized the charges against Tornado Cash founders, arguing that the charges cannot be about money transmitting because Tornado Cash tools only provided the software to transfer funds but did no such transmissions in itself.
This is not the first time Tornado Cash is at a crossroads with the government. In August 2022, the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. A year ago, one of the developers for Tornado Cash was also arrested over money laundering charges.
