Federal authorities on Wednesday charged two men with running a massive money-laundering scheme that allegedly involved more than $1 billion in illegal transactions. This included moving hundreds of millions of dollars worth of cryptocurrency for North Korean hackers connected to that country’s government.
The charges filed in Manhattan federal court accused Roman Storm of Washington and his business partner Roman Semenov, a Russian citizen, of laundering money and violating sanctions through their business Tornado Cash. This cryptocurrency “mixer” allegedly moved money for the Lazarus Group, a sanctioned North Korean cybercrime organization.
Storm and Semenov advertised their business as a privacy-focused financial service, when in fact they were knowingly working to help criminals hide their money. This type of mixing service is popular among cybercriminals as a means of hiding and moving illegal profits. However, FBI Director Christopher A. Wray reassured that “you can’t hide from us behind a keyboard — whether you’re a hacker or a facilitator.”
Brian Klein, a lawyer for Storm, stated there is “a lot more to this story that will come out at trial.” He added that Storm is “incredibly disappointed” that the prosecutors chose to charge him due to his software development, based on a novel legal theory. Storm has been cooperating with the prosecutors’ investigation since last year and denies any criminal conduct.
The Justice Department has put more resources and effort into pursuing criminals who use cryptocurrency to hide assets and evade law enforcement. It is a worldwide game with vast sums of money at stake. James Smith, the head of the FBI’s New York office, commented: “It’s harder to trace, but we’re getting smarter every day to trace the currency and expose some of these systems that criminals are using.”
Storm and Semenov and a third, unidentified founder began Tornado Cash with a $900,000 investment from a California-based venture capital fund. When the founders suggested they create a version that would meet federal anti-money-laundering and know-your-customer rules, the investors allegedly dismissed the idea.
Federal investigators claim the two men knowingly allowed the Lazarus Group to launder money on behalf of the North Korean government in 2022. Storm has been arrested; Semenov remains at large. They were charged with conspiracy to commit money laundering, conspiracy to violate U.S. sanctions and conspiracy to operate an unlicensed money transmitting business. If convicted on the most serious charge, they face up to 20 years in prison.