The U.S. DOJ has filed charges against two Tornado Cash developers with a privacy protocol operating on the Ethereum network. This protocol developed an unclear and hazy connection between sender and recipient addresses.
The two developers, Roman Storm, and Roman Semenov, face legal charges related to money laundering and sanctions violations due to their involvement in developing the protocol.
Violations tied to Tornado Cash relate to their work with the privacy mixer or tumblers, which “facilitated more than $1 billion in money laundering,” including “hundreds of millions” for North Korea’s Lazarus Group. The DOJ has already caught Roman Storm.
The U.S. Treasury Department’s OFAC first sanctioned Lazarus Group after it was said that Lazarus used virtual currency mixer Blender for laundering money from multiple crypto hacks. On Wednesday, OFAC also sanctioned Semenov and eight Ethereum addresses he is thought to control.
Crypto Chaos: Tornado Cash Developers Assissted Hackers and Fraudsters
The Department of Justice issued a statement that accused Storm and Semenov of intentionally aiding in money laundering. According to the statement made by U.S. Attorney Damien Williams, “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.”
“Today’s indictment is a reminder that money laundering through cryptocurrency transactions violates the law, and those who engage in such laundering will face prosecution.”
The Department of Justice goes on to argue that if Storm and Semenov wished they could maintain control over Tornado Cash and had the authority to integrate transaction monitoring or anti-money laundering measures.
DOJ’s Claims on Tornado Crypto Developers
The Department of Justice conviction claimed, “The 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 Department of Justice provided evidence through Storm’s message to Semenov. In the message, Semenov stated that Storm had said they “should never… talk as if we own tornado”. In addition, the DOJ indictment emphasized that KuCoin and BitMart had attempted to contact Tornado Cash’s developers following the hacks in 2020 and 2021, but they have yet to offer any help.
What Crypto Enthusiasts Are Saying About the Tornado Cash Developers
Members of the crypto community continue to present their criticism regarding the sanctions imposed by the DoJ/OFAC on Tornado Cash developers and the protocol itself.
Layah Heilpern, a well-known influencer in the crypto space, made a compelling point on Twitter, emphasizing that “Privacy is a human right.”
She also mentioned that the U.S. government desires complete control over people’s personal information and finances. Additionally, she suggested that if the government genuinely aimed to prevent harmful activities, they should consider holding themselves accountable.
Naomi Brockwell pointed out that the Tornado Cash Devs had created a decentralized technology for financial privacy. She mentioned that they are now facing responsibility for events occurring years after they had removed their admin keys.
The term “destroyed their admin keys” refers to the developers giving up their rights to change their smart contracts.
Tornado Cash operates through numerous unchangeable “Smart Contracts” on the Ethereum blockchain.
Brockwell stressed the importance of defending privacy and emphasized that financial privacy is crucial for a society to remain free. She conveyed this message through a Tweet.
Building the Next Horizon with Tornado Cash Developers
Since last year, the U.S. government has been sanctioning Tornado Cash. These problems have shown how hard it can be to shut down a “decentralized” service. The open-source code for Tornado Cash has been used to make new apps that do similar things.
The core blockchain-based software, or “Smart Contracts,” that makes Tornado Cash work can still be used on Ethereum. It is against the law in the U.S. to use smart contracts. So, Many blockchain infrastructure providers like Infura and Alchemy have stopped their access to the Tornado Cash App.
