Tornado Cash co-founder pleads not guilty in money laundering case
- It was in August 2022 that the U.S. authorities sanctioned Tornado Cash.
- The second accused, Roman Semenov, is a fugitive outside of the U.S. The third accused, Alexey Pertsev, was arrested in the Netherlands last year.
Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, pleaded not guilty in a New York District Court, Inner City Press reported on 6 September. Storm faced charges of conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unauthorized money-transmitting business.
Judge: How do you plead?
Storm: Not guilty.
AUSA: Defendant with Tornado Cash helped North Korea's hackers Lazarus Group…There will be discovery from GitHub
— Inner City Press (@innercitypress) September 6, 2023
The U.S. Department of the Treasury announced Storm’s arrest last month.
Prosecutors alleged in the court that Tornado Cash is an infamous crypto mixer. It laundered over $1 billion in illicit proceeds, violating U.S. sanctions.
Lazarus Group, the notorious hacking outfit allegedly sponsored by the North Korean state, was aided by Storm, along with Tornado Cash, prosecutors claimed.
The judge ruled that Storm will be released on a $2 million personal recognizance bond secured by his Washington home, co-signed by one “financially responsible” individual. However, he will stay under house arrest.
A trial will take place on 30 November.
The second accused, Roman Semenov, is a fugitive outside of the U.S. The local police arrested the third accused, Alexey Pertsev, in the Netherlands in August 2022.
Both Semenov and Pertsev are the other co-founders of Tornado Cash.
Groups oppose sanction, alleging a violation of free speech
It was in August 2022 that the Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. The enforcement barred U.S. residents from using the crypto mixer.
At that point of time, the U.S. Treasury Department said that the mixer provided a platform for laundering “proceeds of cybercrimes, including those committed against victims in the United States.”
In October 2022, a Washington-based non-profit Coin Center sued the Treasury over the action. The plaintiffs stated that Tornado Cash is necessary to protect their right to privacy.
In May 2023, a group of Coinbase [COIN] backed plaintiffs also sued the Treasury. The U.S. sanction on Tornado Cash is an infringement on free speech and a violation of the First Amendment, the plaintiffs alleged.
Authorities failed to prove sanctionable interest in immutable, open-source smart contracts. The plaintiffs also claimed that the Treasury only produced three examples of money laundering from among millions of transactions.
In an amicus brief filed in June 2023, Blockchain Association called the Treasury’s action “unprecedented and unlawful.”
Though there is a lot of opposition to the sanction against the mixer as is evident, the U.S. authorities are going ahead with the legal action.