Hours after the DOJ announced that former OpenSea 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 the two founders ominous clouds loom, heralding an approaching storm.
On Wednesday, Roman Storm, 34, and Roman Semenov, 35, the founders of Russian cryptocurrency mixer platform Tornado Cash, were charged with laundering more than $1 billion through its platform, according to a recently revealed indictment.
Tornado Cash has an unfortunate history as a tool and resource to help pinpoint the location of stolen money and then distribute it to many wallets, with no way of knowing where it originally came from.
In April and May 2022, Tornado Cash’s service was reportedly used by (now sanctioned) North Korean cybercrime organization Lazarus Group to launder hundreds of millions of dollars in hacking proceeds.
Storm was arrested in Washington state on Wednesday and the case has been assigned to U.S. District Judge Katherine Polk Failla, but Semenov remains at large.
“While Storm and Semenov publicly claimed to offer a technically advanced privacy service, in fact they knew they were helping hackers and fraudsters hide the fruits of their crimes. Today’s indictment reminds us that money laundering through cryptocurrency transactions is against the law, and those who engage in such money laundering will be prosecuted,” said US Attorney Damian Williams.
Williams also led efforts to bring OpenSea’s Nathan Chastain to justice, in what the U.S. Justice Department considers “the first-ever digital asset insider trading system.”
In addition to three months of house arrest and three months of community service, Chastain will also receive approximately $26,000 (15 ETH) and a $50,000 fine, equal to the amount he profited from the illegal trade of NFTs.
“These allegations should serve as yet another warning to those who believe they can turn to cryptocurrency to cover up their crimes and conceal their identities, including cryptocurrency mixers: no matter how sophisticated your plan is or how many attempts you did to anonymize yourself. the Justice Department will track you down 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 use to launder money to the detriment of investors and the average consumer, Director Christopher A. Wray has issued his own warning to criminal organizations around the world who believe that they are ‘untraceable’. ‘ and ‘anonymous:’
“…You can’t hide from us behind a keyboard – whether you’re a hacker or a facilitator. As with this operation, the FBI will continue to dismantle the infrastructure cybercriminals use to commit and profit from their crimes, and hold accountable anyone who assists these criminals.”
Both founders have each been charged with one charge of “conspiracy to commit money laundering” and one charge of “conspiracy to violate the International Economic Emergency Powers Act.” Each charge carries a maximum prison term of 20 years.
Both Storm and Semenov were also charged with one charge of “conspiracy to operate an unlicensed money transmission company,” which carries a maximum sentence of five years in prison.
Is this the end for Tornado Cash?