Cryptocurrency Laundering Exposed: U.S. Charges Two Men with Moving Over $1 Billion
U.S. Federal Authorities Unearth Expansive Cryptocurrency Laundering Operation with Ties to North Korean Cybercrime
Court Charges Washington State Resident and Russian Business Partner
On Wednesday, federal authorities charged two men with operating a massive money laundering scheme that allegedly processed more than $1 billion in unlawful transactions, including the transfer of hundreds of millions of dollars’ worth of cryptocurrency for North Korean hackers with connections to the government of that country.
FBI Director Warns, Cybercriminals Not Beyond Traceability or Anonymity
The charges filed in Manhattan federal court accuse Washington state resident Roman Storm and his Russian business partner Roman Semenov of money laundering and violating sanctions through their business, Tornado Cash, a cryptocurrency “mixer” that allegedly moved funds for the Lazarus Group, a sanctioned North Korean cybercrime organization.
Venture Capital Involvement and Alleged Dismissal of Compliance
Authorities claim that the two men advertised their business as a privacy-focused financial service when, in reality, they were plotting to help criminals conceal their funds.
According to federal investigators, such “mixing” services are becoming increasingly popular among cybercriminals as a means of concealing and transferring illicit profits. However, FBI Director Christopher A. Wray stated in a written statement that these perpetrators are neither untraceable nor anonymous. You cannot conceal behind a keyboard from us, regardless of whether you are an infiltrator or a facilitator.”
Accusations of Aiding North Korean Government in Laundering Funds
In recent years, the Justice Department has devoted more resources and manpower to pursing criminals who use cryptocurrency to conceal assets and evade law enforcement — a global cat-and-mouse game that can involve enormous quantities of money.
According to the indictment, Tornado Cash was founded by Storm, Semenov, and an unnamed third founder with a $900,000 investment from a California-based venture capital fund. The investors at the venture capital fund “scoffed” at the founders’ suggestion that they create a version of the service that adhered to federal anti-money laundering and know-your-customer regulations, according to the indictment. One of them allegedly wrote, “It is unlikely that we would use a ‘compliant mixer’ as a fund.”
Potential 20-Year Prison Sentence for Conviction on Severe Charge
Authorities assert that Storm and Semenov permitted the Lazarus Group to launder funds for the North Korean government in the spring of 2022. Storm has been apprehended, while Semenov remains at large, according to officials.
The two were charged with money laundering conspiracy, violation of U.S. sanctions conspiracy, and conspiracy to operate an unlicensed money transfer business. They face up to 20 years in prison if found guilty of the most severe charge.
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