On Wednesday, the United States formally sanctioned Roman Semenov, co-founder of the virtual currency mixer Tornado Cash. Officials accuse him of helping North Korean hackers launder hundreds of millions in stolen funds.
The Treasury Department coordinated the sanctions with the Justice Department, which indicted Semenov and another Tornado Cash founder for conspiracy to commit money laundering.
Semenov Allegedly Failed to Prevent Lazarus Group From Laundering Funds
According to the Treasury Department’s Wednesday announcement, Semenov learned in April that a public cryptocurrency address connected to Lazarus Group was sending laundered funds through Tornado Cash. Despite this, Semenov continued operating Tornado Cash and did not enact sufficient measures to stop the illicit use.
Learn more about the world’s most infamous crypto mixer: Tornado Cash: Everything You Need To Know
The Treasury Department’s Office of Foreign Assets Control (OFAC) said Tornado Cash has helped North Korean hackers, dubbed the Lazarus Group, obfuscate the source of over $455 million stolen this year.
The Lazarus Group is accused of carrying out massive thefts from blockchain bridges and using Tornado Cash to launder the proceeds. This, the US government believes, provides funds for North Korea’s missiles and nuclear weapons.
Tornado Cash, a crypto mixer, anonymizes transactions on the blockchain, hiding the source of funds. It does this by shuffling cryptocurrency transactions from multiple users to obscure the original source of funds.
The Lazarus Group has allegedly stolen over $2 billion in digital assets over ten years. Treasury firmly believes that North Korea uses hacking to make money for its weapons programs. The hermit country lacks access to traditional finance as it faces heavy US and UN sanctions.
In addition to the Ronin hack, the Lazarus Group used Tornado Cash to launder $96 million from the June theft of Harmony’s Horizon bridge and $7.8 million from the August Nomad heist.
Semenov promoted his crypto mixer in media interviews but downplayed evidence it was used for money laundering, the government alleges.
The Lazarus Group First Received US Sanctions in 2019
The sanctions and indictments aim to disrupt services like Tornado Cash that cybercriminals exploit, Treasury said. However, privacy advocates have warned that banning tools like mixers could infringe on rights. Among their defenders is Ethereum founder Vitalik Buterin, who has previously used the crypto mixer to donate to Ukraine.
Semenov should have been more than aware of the Lazarus Group’s activities, considering it received sanctions in 2019 for being an arm of the North Korean government.
Treasury said it will keep up the heat on North Korea’s digital money laundering with sanctions and other measures.
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