August 25, 2023

US designates one of the co-founders of Tornado Cash

On August 23, 2023, the US Department of the Treasury’s Office of Foreign Assets Control designated Tornado Cash’s co-founder and key developer, Roman Semenov, in connection with the laundering of hundreds of millions of dollars for cybercriminals, including the Lazarus Group, a hacking group sponsored by the Democratic People’s Republic of Korea (“DPRK”).  Tornado Cash is a virtual currency mixer that the Lazarus Group reportedly used to launder more than $455 million worth of virtual currency that the group allegedly stole in March 2022, the largest known virtual currency heist to date.  Tornado Cash was sanctioned by OFAC in 2022 for providing mixing services to the Lazarus Group and other cybercriminals, while the Lazarus Group was sanctioned in 2019 for allegedly stealing more than $2 billion worth of digital assets across multiple thefts in order to support the DPRK and obtain revenues for its ballistic missile and nuclear weapons programs.  Semenov is accused of actively promoting Tornado Cash services and increasing the anonymity of those services after he was alerted that the Lazarus Group was using the platform to launder large volumes of stolen virtual currency.

According to OFAC, the designation was timed to coincide with the arrest of Roman Storm, a second Tornado Cash cofounder, and the Department of Justice’s unsealing of an indictment against Semenov and Storm for charges of conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and conspiracy to commit sanctions violations.  OFAC reports that a third Tornado Cash cofounder, Alexey Pertsev, was arrested in the Netherlands by Dutch authorities in August 2022 on related money laundering charges.

Semenov is being designated pursuant to Executive Order 13694, as amended by EO 13757, for engaging in significant malicious cyber-enabled activities and providing support to a person whose property and interests in property are blocked pursuant to EO 13694, as amended.  He is also being designated pursuant to EO 13722 for materially assisting the Government of North Korea, a person whose property and interests in property are blocked pursuant to EO 13722.  As a result of this designation, all property and interests in property of this designee within the United States or within the possession or control of a US person are blocked, and US persons are generally prohibited from engaging in transactions involving the designated person.  In addition, entities owned 50 percent or more by one or more blocked persons are also blocked.

Department of TreasuryPress Release