The two advertised their business as a privacy-focused financial service, when in reality they were knowingly helping criminals hide their money, authorities say.
Federal investigators say such hybrid services are popular among many cybercriminals to hide and move illicit profits. But FBI Director Christopher A. Wray said in a written statement that such criminals “are not untraceable or anonymous. You can’t hide behind a keyboard from us — whether you’re a hacker or a facilitator.”
“There’s a lot more to this story that will come out at trial,” said Brian Klein, Storm’s attorney.
“We are incredibly disappointed that prosecutors chose to indict Mr. Buell because he helped develop the software, and they did so based on a new legal theory that has dangerous implications for all software developers,” Klein said in a written statement. “Mr. Buell has been cooperating with prosecutors’ investigations since last year and disputes that he was involved in any criminal activity.
FTX founder Samuel Bankman-Fried’s bail revoked, remand in custody
In recent years, the Department of Justice has put more resources and effort into pursuing criminals who use cryptocurrency to hide assets and evade law enforcement — a global cat-and-mouse game that involves huge sums of money.
“It’s a new way to launder money,” said James Smith, head of the FBI’s New York office. “It’s hard to find, but we’re getting smarter every day at finding the currency and exposing some of these systems that criminals use.”
Buell and Semanov and a third, unidentified founder started Tornado Cash with a $900,000 investment from a California-based venture capital fund, according to the indictment. At one point, when the founders suggested creating a version of the service that would comply with federal anti-money laundering and your customer rules, investors in the venture capital fund “rejected the idea,” the indictment says. One of them wrote that “Financially it is not possible for us to use a ‘harmonious mix'”.
Authorities allege that Buell and Semenov knowingly allowed the Lazarus Group to launder money on behalf of the North Korean government in the spring of 2022. Storm was arrested; Semenov is absconding, authorities said.
couple Charged with conspiracy to commit money laundering, conspiracy to violate US sanctions and conspiracy to conduct an unlicensed money laundering business. A conviction on the most serious charges carries a prison sentence of up to 20 years.