- Co-founder of Tornado Cash sanctioned by the U.S. DOJ.
- The recent development could have a massive impact on the stability of the crypto market.
The month of August is presenting a handful of roadblocks for the crypto market, as a notable crypto founder gets sanctioned by the US Department of Treasury.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), imposed sanctions on the co-founder of Tornado Cash on Wednesday, August 23rd. Roman Semenov, who is one of the three co-founders of Tornado Cash, has been accused of partaking in money laundering in North Korea.
According to an official statement shared by the U.S. Department of the Treasury, on its official website, the Tornado co-founded was providing material support to Tornado Cash and to the Lazarus Group. It is worth noting that the Lazarus Group is a state-sponsored hacking group. It is “an instrumentality of the Democratic People’s Republic of Korea (DPRK or North Korea)” the DOJ wrote.
Tornado Cash has functioned as an instrument for money laundering for criminal actors since it was first enacted in 2019, according to the DOJ. It has also been utilized to obfuscate millions of dollars in digital currencies stolen by the Lazarus Group hackers. It bears mentioning that the Lazarus Group was sanctioned by the United States back in 2019.
How will the recent development affect the crypto market?
The Group facilitates the movement of more than $455 million stolen in the March 2022 Axie Infinity’s Ronin network bridge. The heist currently holds the position of the largest known cryptocurrency heist.
Even after they knew the Lazarus Group was laundering hundreds of millions of dollars’ worth of stolen virtual currency through their mixing service for the benefit of the Kim regime, Tornado Cash’s founders continued to develop and promote the service and did not take meaningful steps to reduce its use for illicit purposes.
Wally Adeyemo, the Deputy Secretary of the Treasury said.
In addition to this arrest, the FBI and the IRS also arrested Roman Storm, the second co-founder of Tornado Cash. Storm allegedly conspired to operate an unlicensed money-transmitting venture. On the other hand, Alexey Pertsev, the last co-founder, was arrested back in 2022, in the Netherlands.
The cryptocurrency community has been in a state of frenzy after the new development involving the prominent cryptocurrency founder surfaced. The news comes at a time when the community is attempting to push for more regulatory clarity from leading regulatory bodies.
The cryptocurrency market has had its fair share of controversy, especially involving founders that have broken regulatory guidelines in the past. Back in 2022, a handful of crypto players made headlines for parking in illicit activities and potentially putting customers in harm’s way.
As a result, regulators like the U.S. Securities and Exchange Commission have been even stricter with crypto regulatory implementations. In response, market players assert that the event development is likely to do more harm than good for the image of the cryptocurrency market and its communities.
