On August 23, the US Treasury Department's Office of Foreign Assets Control (OFAC) designated Roman Semenov, a co-founder of the Tornado Cash cryptocurrency "mixer," as a Specially Designated National and Blocked Person (SDN). Simultaneously, another co- founder, Roman Storm, was arrested by the FBI and the Internal Revenue Service Criminal Investigation Unit in Washington state.
Both Semyonov and Storm are facing charges outlined in an unsealed indictment, which includes conspiracy to launder money, conspiracy to violate sanctions, and conspiracy to operate an unlicensed money transmitter business. The first two charges carry a maximum penalty of 20 years in prison, while The money transfer charge has a maximum penalty of five years in prison.
While Storm has been apprehended, Semyonov remains at large. Alexey Pertsev, the third co-founder of Tornado Cash, was arrested in the Netherlands in August 2022 on money laundering charges. The US Attorney for the Southern District of New York, Damian Williams, stated that Storm and Semenov claimed to offer privacy services but were, in fact, aiding hackers and fraudsters in concealing their illicit gains.
This recent enforcement action is part of the US government's ongoing efforts to clamp down on Tornado Cash. Last year, OFAC added $44 worth of tokens and ether addresses linked to the mixer to the SDN list, effectively preventing US residents from using its services. However , these sanctions have sparked a backlash within the cryptocurrency community. Coinbase and advocacy group Coin Center have both filed lawsuits against the Treasury Department, alleged overreach.
Tornado Cash has been implied in money laundering by the Lazarus Group, a North Korea-linked hacking group that is also on the SDN list. The mixer has been accused of laundering more than $1 billion in ill-gotten gains, extending beyond the activities of the Lazarus Group, according to the allegations made by the Justice Department.
