Tornado Cash founders charged with money laundering crypto, including proceeds from North Korean heists

Tornado Cash co-founders Roman Storm and Roman Semenov have been charged with money laundering, sanctions violations and operating an unlicensed money transfer business, the US Department of Justice announced on Wednesday. The announcement came a day after the FBI revealed that North Korean hackers — who have been shown to have used cryptocurrency mixer Tornado in the past — wanted to pay out $40 million worth of stolen bitcoin.

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• “The defendants ran a $1 billion scheme designed to help other criminals launder and hide funds using cryptocurrencies, including by laundering hundreds of millions of dollars on behalf of a state-sponsored North Korean cybercrime group run by the U.S. government sanctioned,” U.S. Attorney General Marrick B. Garland said in the statement.
• US citizen Roman Storm was arrested in Washington on Wednesday. His business partner Semenov, a Russian citizen, has not yet been taken into custody, and the DOJ has not given a date for his arrest.
• Storm’s attorney, Brian Klein, of Waymaker LLP, said the Tornado Cash founder “denies” involvement in criminal conduct and has cooperated in prosecutors’ investigations over the past year.
• Last Thursday, a U.S. district court concluded that U.S. sanctions against Tornado Cash for money laundering are valid and dismissed the legal challenge brought by six users of the crypto mixer. The US Office of Foreign Assets Control imposed sanctions on Tornado Cash on August 8, 2022.
• The mixer has processed $7 billion worth of cryptocurrency since 2019, including over $455 million stolen by the state-backed North Korean hacker group Lazarus, according to the FBI. The FBI says laundered cryptocurrencies are being used to support North Korea’s weapons programs.
• Meanwhile, the FBI announced on Tuesday that it had identified blockchain activity related to the Lazarus Group and another Pyongyang-linked hacking organization, APT38. Based on cryptocurrency data collected Monday and Tuesday, the agency said cyber actors associated with the hacking groups moved about 1,580 bitcoin ($41.6 million) across six bitcoin addresses, likely for liquidation.
• The FBI claims these actors are responsible for several major crypto thefts. The thefts included a $60 million crypto heist from digital wallet service Alphapo, $37 million from crypto payment gateway CoinsPaid, and $100 million from Atomic Wallet — all in June 2023.
• The US, Japan and South Korea agreed on Aug. 18 to set up a trilateral working group to counter North Korean cyberattacks as early as next month, South Korean newspaper KBS News reported on Saturday.
• Blockchain analytics firm Chainalysis said North Korea-backed hackers stole $1.7 billion worth of cryptocurrency in 2022.

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