Tornado Cash 'laundered over $1B' in criminal crypto-coins

Two founders of Tornado Cash were formally accused by US prosecutors coming of laundering much than $1 cardinal successful criminal proceeds done their cryptocurrency mixer.

As good arsenic unsealing an indictment against nan brace connected Wednesday, nan Feds besides arrested 1 of them, 34-year-old Roman Storm, successful his location authorities of Washington, and hauled him into court. Fellow laminitis and co-defendant Roman Semenov, a 35-year-old Russian citizen, is still astatine large. 

As a cryptocurrency mixer, Tornado Cash is appealing to cybercriminals arsenic it offers to supply them a grade of anonymity.

Transactions betwixt cryptocurrency wallets are typically logged successful blockchains, allowing investigators and netizens to way nan activity of, say, stolen funds. Tornado Cash tries to obfuscate transactions by allowing users to nonstop successful their crypto-coins, which are past mashed up successful a ample mixed pool. Those users tin past retreat their costs from nan excavation minus immoderate fees. Those extracted coins are not nan ones they put into nan system, truthful nan money comes retired cleanable and disconnected from its source.

Tornado Cash was sanctioned by Uncle Sam a small complete a twelvemonth agone for helping North Korea's Lazarus Group scrub costs stolen successful nan Axie Infinity hack. Additionally, nan US Treasury Department said Tornado Cash was utilized to launder costs stolen successful nan Nomad span and Harmony span heists, some of which were besides linked to Lazarus.

Storm and Semenov were some charged pinch conspiracy to perpetrate money laundering and conspiracy to perpetrate sanctions violations, each carrying a maximum punishment of 20 years successful prison. A 3rd charge, conspiracy to run an unlicensed money transmitting business, could nett nan brace up to an further 5 years upon conviction. 

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In nan unsealed indictment [PDF], prosecutors said Tornado Cash boasted astir its anonymizing features and that it could make money untraceable, and that Storm and Semenov refused to instrumentality changes that would dial backmost Tornado's thief-friendly money-laundering capabilities and bring it successful statement pinch financial regulations.

"Tornado Cash grounded to found an effective [anti money laundering] programme aliases prosecute successful immoderate [know your customer] efforts," Dept of Justice lawyers argued. Changes made publically to make it look arsenic if Tornado Cash was legally compliant, nan DoJ said, were laughed disconnected arsenic ineffective successful backstage messages by nan charged pair. 

"While publically claiming to connection a technically blase privateness service, Storm and Semenov successful truth knew that they were helping hackers and fraudsters conceal nan fruits of their crimes," said US Attorney Damian Williams. "Today's indictment is simply a reminder that money laundering done cryptocurrency transactions violates nan law, and those who prosecute successful specified laundering will look prosecution."

What of nan mysterious 3rd founder?

While Storm and Semenov were nan ones named connected nan rap sheet, they aren't nan only group progressive with, aliases arrested over, their engagement successful Tornado Cash. A 3rd unnamed and uncharged personification mentioned successful nan DoJ indictment referred to arsenic "CC-1" is described arsenic 1 of nan 3 main group down nan sanctioned service. 

Despite that, nan Dept of Justice didn't denote immoderate charges against CC-1.

Clues constituent to CC-1 perchance being Alexey Persev, a Russian package developer linked to Tornado Cash who was arrested successful The Netherlands soon aft nan US sanctioned nan crypto-mixing site. Persev was charged successful that Euro federation pinch facilitating money laundering and concealing criminal financial flows, and is now retired of jailhouse connected monitored location merchandise awaiting trial. 

Persev denies immoderate wrongdoing, and claimed he wasn't told why he was being detained. His defenders argued he shouldn't beryllium held accountable for penning Tornado Cash codification since he didn't do immoderate of nan alleged money laundering himself.

It's not instantly clear if Pertsev is CC-1, nor is it clear why CC-1 wasn't charged. We put those questions to nan DoJ, and haven't heard back. ®