US Prosecutors Charge Founders of Crypto Mixer Tornado Cash with Money Laundering

US prosecutors yesterday formally accused Roman Storm, 34, and Roman Semenov, 35, the founders of notorious crypto mixer Tornado Cash, of laundering over $1 billion in assets illicitly gained via their platform. The legal documents were made public on Wednesday, resulting in Storm's arrest in Washington. His associate, Roman Semenov from Russia, is still at large.

Crypto mixers such as Tornado Cash are increasingly hotbeds for cybercriminals. These platforms let users obfuscate the origins of their cryptocurrency by pooling it with other funds. Users can then withdraw "clean" funds for a service fee. This service streamlines the laundering process, eliminating complexities typically associated with illicit fund obfuscation.

The indictment comes after the US placed sanctions last year on Tornado Cash for helping the North Korean Lazarus Group disguise funds pilfered in notable hacks, including the Axie Infinity, Nomad bridge and Harmony bridge breaches.

"Roman Storm and Roman Semenov allegedly operated Tornado Cash and knowingly facilitated this money laundering," reads the Department of Justice (DoJ) press release. "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. 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."

Both Storm and Semenov now face severe legal consequences, with accusations of conspiring to launder money and violate sanctions. Both allegations could carry prison terms of up to 20 years. A separate charge concerning the orchestration of an unauthorized money-transferring enterprise could add another five years.

Amid the controversy, a DoJ alluded to a third suspect in its indictment. Referred to only as CC-1, this individual is portrayed as a pivotal figure in the operation of Tornado Cash.

Some sources have speculated that CC-1 may be Russian software developer Alexey Persev, who has previously been connected to Tornado Cash and was briefly detained in the Netherlands following US sanctions against the platform.

Persev has denied these allegations. His defenders argue that writing the Tornado Cash code does not make him liable for the laundering activities of its users.