Toronto Cash Founders Caught in a Laundering Scandal

Toronto Cash Founders Caught in a Laundering Scandal

The owners of Tornado Cash, a cryptocurrency mixer business that is subject to sanctions, have been charged with laundering over $1 billion in illegal proceeds, according to the U.S. Department of Justice (DoJ). Both Roman Storm and Roman Semenov are accused of conspiring to launder money, breaking sanctions, and operating an unauthorized money-transfer firm. Storm, 34, was detained in Washington, but Semenov is still being evasive in Dubai. They allegedly made significant revenues from the service’s operation and promotion. In three years, Tornado Cash is thought to have processed crypto assets worth almost $7 billion.

In a related incident, Roman Semenov and eight Bitcoin addresses connected to him have been sanctioned by the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department. This action was taken when a U.S. court ruled that Tornado Cash might face penalties on its own. According to Elliptic, the sanctioned addresses have interacted with both centralized and decentralized exchanges, processing more than $11.5 million in multiple cryptocurrencies, including Tornado Cash’s governance token (TORN).

Tornado Cash was launched in 2019 and works as a decentralized mixer service to mix the cryptocurrencies of different users, hiding the source and ownership of the money. This blending procedure tries to make transactions anonymous and untraceable, a characteristic that has drawn criminal actors looking to conceal the sources of their illegal earnings.

Roman Storm and Roman Semenov, two of the Tornado Cash co-founders, are the accused parties. Alexey Pertsev, the third co-founder, was detained in the Netherlands in August of the previous year and is presently being held on suspicion of money laundering while awaiting trial. Tornado Cash is also accused of failing to implement sufficient Know Your Customer (KYC) and anti-money laundering measures, which are required by law. Additionally, the service was not listed as a money-transmitting company with the U.S. Financial Crimes Enforcement Network (FinCEN).

The Lazarus Group, a well-known North Korean threat actor, is accused by the U.S. Department of Justice (DoJ) of using Tornado Cash to help launder hundreds of millions of dollars for them between the months of April and May of 2022. This engagement made it possible for transactions to take place that broke sanctions laws.

This information was made public a year after Tornado Cash was sanctioned by the U.S. Treasury Department over allegations that it provided “material support” to the hacking group and helped launder more than $500 million that had been stolen in cyberattacks on Axie Infinity and Harmony Horizon Bridge.

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Abdul Wahab is a Software Engineer by profession and a Tech geek by nature. Having been associated with the tech industry for the last five years, he has covered a wide range of Tech topics and produced well-researched and engaging content. You will mostly find him reviewing tech products and writing blog posts. Binge-watching tech reviews and endlessly reading tech blogs are his favorite hobbies.