{"id":52204,"date":"2023-08-23T20:41:00","date_gmt":"2023-08-24T00:41:00","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/tornado-cash-developers-charged-with-money-laundering-and-sanctions-violations-that-facilitated-over-1-billion-in-illicit-transactions\/"},"modified":"2023-08-23T20:41:03","modified_gmt":"2023-08-24T00:41:03","slug":"tornado-cash-developers-charged-with-money-laundering-and-sanctions-violations-that-facilitated-over-1-billion-in-illicit-transactions","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52204","title":{"rendered":"Tornado Cash Developers Charged With Money Laundering and Sanctions Violations That Facilitated Over $1 Billion in Illicit Transactions"},"content":{"rendered":"
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Two more developers who worked on Tornado Cash, an Ethereum network-based privacy protocol designed to obfuscate the link between sending and receiving addresses, are being charged by the US Depart of Justice.<\/p>\n

Developers Roman Storm and Roman Semenov are both being charged with money laundering and sanctions violations, owing to their work on the protocol.<\/p>\n

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Tornado Cash wasfirst sanctioned by the US government in 2022, with another of the protocol\u2019s co-founders Alexey Pertsev getting arrested in Amsterdam almost immediately afterwards.<\/p>\n

As per the DoJ, Tornado Cash has been used to launder billions in funds, including hundreds of millions for North Korea\u2019s notorious hacking cartel the Lazarus Group.<\/p>\n

Roman Storm has already been arrested, while Semenov has been sanctioned by the US Office of Foreign Assets Control (OFAC).<\/p>\n

Storm and Semenov Knew They Were Helping Hackers and Fraudsters<\/strong><\/h2>\n

In a statement, the DoJ accused Storm and Semenov of knowingly facilitating money laundering.<\/p>\n

“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,\u201d US Attorney Damien Williams said in the statement.<\/p>\n

\u201cToday\u2019s indictment is a reminder that money laundering through cryptocurrency transactions violates the law, and those who engage in such laundering will face prosecution\u201d.<\/p>\n

The DoJ goes on to claim that Storm and Semenov maintained control over Tornado Cash and could have implemented transaction monitoring, or anti-money laundering features, had they so chosen.<\/p>\n

\u201cThe defendants and [Alexey Pertsev] recognized that they did not incorporate KYC or AML programs as required by law, and so they made misleading public statements to minimize their ownership and control of the Tornado Cash service, and their operation of the Tornado Cash service as a business from which they expected to generate substantial profits,” the DoJ indictment read.<\/p>\n

The DoJ presented evidence in the form of a message sent by Storm to Semenov where he said they \u201cshould never\u2026 talk as if we own tornado\u201d.<\/p>\n

Morevoer, the DoJ\u2019s indictment cited the fact that KuCoin and BitMart had both reached out to Tornado Cash developers after their hacks in 2020 and 2021, but that they offered no assistance.<\/p>\n

Crypto Community Critical<\/strong><\/h2>\n

Members of the crypto community remain critical of the DoJ\/OFAC\u2019s sanctions against Tornado Cash developers and the protocol itself.<\/p>\n

\u201cPrivacy is a human right,\u201d argued popular crypto influencer Layah Heilpern via Twitter.<\/p>\n

\u201cIt’s clear the US government want absolute control over your data and finances,\u201d she continued, adding that \u201cif they really cared about elicit activity they would start by sanctioning themselves\u201d.<\/p>\n

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\u201cTornado Cash Devs created a decentralized technology for financial privacy… Now they’re being held liable for events that took place years after they’d destroyed their admin keys,\u201d argued Naomi Brockwell.<\/p>\n

\u201cDestroyed their admin keys\u201d refers to the developers of the smart contracts that power Tornado Cash revoking their own permissions to continue tweaking their own smart contracts.<\/p>\n

Tornado Cash is a decentralized application that is powered by dozens of smart contracts that are now completely immutable (i.e. no one can ever delete them from the Ethereum blockchain).<\/p>\n

\u201cWe must push back against the attack on privacy. Financial privacy is vital for a free society,\u201d Brockwell urged via a Tweet.<\/p>\n

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A US federal court recently backed the US Treasury Department\u2019s right to impose sanctions on the cryptocurrency mixer Tornado Cash, dismissing a Coinbase-backed lawsuit filed by six users.<\/p>\n<\/p><\/div>\n