Two Developers from Tornado Cash, a privacy protocol on the Ethereum network designed to obscure the connection between sending and receiving addresses, are facing charges from the US Department of Justice (DoJ).
Developers Roman Storm and Roman Semenov are both accused of money laundering and sanctions violations due to their involvement with the protocol.
Tornado Cash came under US government sanctions in 2022 and another co-founder of the protocol, Alexey Pertsev, was swiftly arrested in Amsterdam afterward.
According to the DoJ, Tornado Cash has been utilised for laundering billions of dollars, including hundreds of millions for the notorious hacking group, the Lasarus Group, associated with North Korea.
Roman Storm has already been arrested, while Semenov has been placed under sanctions by the US Office of Foreign Assets Control (OFAC). The DoJ alleges that Storm and Semenov knowingly aided money laundering.
US Attorney Damien Williams stated, “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.
The case filed today acts as a reminder that violators will face legal punishment for exploiting bitcoin transactions for laundering money.
The DoJ further claims that Storm and Semenov retained control over Tornado Cash and could have implemented transaction monitoring or anti-money laundering features if they chose to do so. The complaint presented by the DoJ includes evidence of a message from Storm to Semenov where Storm mentioned they should not talk as if they own Tornado.
Additionally, the indictment pointed out that both KuCoin and BitMart reached out to Tornado Cash developers after suffering hacks in 2020 and 2021, but the developers did not provide assistance.
Despite the allegations, several members of the cryptocurrency community criticise the penalties imposed on the Tornado Cash protocol’s creators. A supporter of privacy, Layah Heilpern, asserted on Twitter that “privacy is a human right” and raised concern about the extent of the government’s control over citisens’ financial and personal data.
Naomi Brockwell argued that the Tornado Cash developers should not be held liable for events that occurred after they had relinquished administrative control over their smart contracts. Tornado Cash operates on decentralised technology, where the developers revoked their admin keys, making the smart contracts immutable.
As the conversation continued, Brockwell highlighted the importance of privacy protection. In order to maintain a democratic society, she underlined the value of financial privacy.
A recent US federal court ruling upheld the US Treasury Department’s authority to impose sanctions on Tornado Cash, dismissing a lawsuit backed by Coinbase and filed by six users.
