Hours after the DOJ announced that OpenSea’s former product manager Nathan Chastain would be sentenced to three months in prison, it just announced another major indictment — this time, against the crypto mixing service, Tornado Cash.
And for its two founders, ominous clouds loom, signaling an impending storm.
On Wednesday, Roman Storm, 34, and Roman Semenov, 35, the founders of the Russian cryptocurrency mixer platform Tornado Cash, were charged with laundering over $1 billion through its platform, according to a newly unsealed indictment.
Tornado Cash has an unfortunate history of serving as the instrument and tool to helping scramble the location of stolen funds and then distributing them across many wallets, without any way to trace where it originally came from.
In April and May 2022, Tornado Cash’s service was allegedly used by (the now sanctioned) North Korean cybercrime organization, Lazarus Group, to launder hundreds of millions of dollars in hacking proceeds.
Storm was arrested on Wednesday in the state of Washington and the case has been assigned to U.S. District Judge Katherine Polk Failla – however, Semenov remains at large.
“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,” said U.S. Attorney Damian Williams.
Williams also spearheaded efforts in bringing OpenSea’s Nathan Chastain to justice, in what the U.S. Department of Justice considers to be “the first-ever digital asset insider trading scheme.”
In addition to three months of home confinement and three months of community service, Chastain will also have to disgorge approx. $26,000 (15 ETH) and a $50,000 penalty equivalent to the amount he profited from the illicit trading of NFTs.
“These charges should serve as yet another warning to those who think they can turn to cryptocurrency to conceal their crimes and hide their identities, including cryptocurrency mixers: it does not matter how sophisticated your scheme is or how many attempts you have made to anonymize yourself, the Justice Department will find you and hold you accountable for your crimes,” said Attorney General Merrick B. Garland.
As the FBI continues to dismantle these crypto-based infrastructures that criminals are using to launder money to the detriment of investors and the average consumer, its Director Christopher A. Wray issued his own warning to criminal organizations throughout the world who believe they are “untraceable” and “anonymous:”
“…You can’t hide from us behind a keyboard — whether you’re a hacker or facilitator. As we have with this operation, the FBI is going to keep dismantling the infrastructure used by cyber criminals to commit and profit from their crimes, and holding anyone who assists those criminals accountable.”
Both founders have each been charged with one count of “conspiracy to commit money laundering” and one count of “conspiracy to violate the International Economic Emergency Powers Act.” Each charge carries a maximum sentence of 20 years in prison.
Both Storm and Semenov were also charged with 1 count of “conspiracy to operate an unlicensed money transmitting business,” which carries a maximum sentence of five years in prison.
Is this the end for Tornado Cash?