Global fintech and funding innovation ecosystem

Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering Scheme

AML | Aug 24, 2023

Unsplash Alexander Grey counting dollar bills - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering Scheme

Image: Unsplash/Alexander Grey

In a significant crackdown on cryptocurrency-related crimes, the U.S. authorities have charged the founders of Tornado Cash, a cryptocurrency mixing service, for their alleged involvement in laundering over $1 billion, including funds for North Korean hackers.

  • The founders of Tornado Cash, Roman Storm from Washington state and Roman Semenov, a Russian national, have been indicted on charges of conspiracy to commit money laundering, sanctions violations, and operating an unlicensed money transmitting business.
  • Tornado Cash, established in 2019, was designed as a "mixer" to obscure cryptocurrency transaction trails. However, it's alleged that the platform was used to launder more than $1 billion, including over $455 million stolen by the Lazarus Group, a North Korean cybercrime organization.

See:  Analysis: Into the Eye of a Tornado | Sanctions Compliance Best Practices for Crypto Businesses

  • While the founders publicized their platform as a privacy-focused service, U.S. Attorney Damian Williams stated that they were aware of their assistance to hackers and fraudsters in concealing illicit funds.
  • Roman Storm has been arrested, while Semenov remains at large. Another co-founder, Alexey Pertsev, is facing legal repercussions in Amsterdam.

Tornado Cash's Operations and Sanctions

  • The platform's decentralized nature was emphasized by Semenov in a 2022 interview, where he mentioned the protocol's design to be "unstoppable."
  • Tornado Cash had previously faced sanctions from the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) in 2022 for its role in laundering over $7 billion in cryptocurrency.

See:  AML laws have failed

  • The platform operated without the necessary know-your-customer (KYC) or anti-money laundering (AML) programs as mandated by U.S. law. Furthermore, they provided users with tips to maintain anonymity, such as using Tor or VPNs and employing different IP addresses for transactions.

Broader Implications

  • The indictment of Tornado Cash's founders underscores the challenges and risks associated with the cryptocurrency sector. As digital currencies gain traction, regulatory bodies worldwide are intensifying their efforts to curb illegal activities and ensure transparency and accountability in the crypto space.

NCFA Jan 2018 resize - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering SchemeThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering SchemeFF Logo 400 v3 - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering Schemecommunity social impact - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering Scheme

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Tornado Cash Founders Charged in Billion-Dollar Cryptocurrency Laundering Scheme




 

Leave a Reply

Your email address will not be published. Required fields are marked *

seven − 5 =