In a recent move, the Office of Foreign Assets Control (OFAC) has added Roman Semenov, co-founder of Tornado Cash, to its list of “specially designated nationals.” This comes as Semenov and another co-founder, Roman Storm, face charges of money laundering and violating sanctions.
According to OFAC, Semenov’s known email addresses and Ethereum wallets have been recorded. This action by OFAC marks a significant step in targeting Semenov individually, rather than just the company Tornado Cash.
The charges against Semenov and Storm allege that they laundered hundreds of millions of dollars’ worth of stolen cryptocurrency on behalf of the Lazarus Group, which is connected to the North Korean regime. The FBI and the IRS have detained Storm, while Semenov’s inclusion on the sanctions list further intensifies the legal action against them.
It is worth noting that nearly a year ago, Semenov’s GitHub account was suspended, and a Tornado Cash developer, Alexey Pertsev, was arrested for facilitating crypto asset-based money laundering. Pertsev was released on bail and is currently awaiting trial.
The decision to add Semenov to OFAC’s list came after a judge ruled in favor of the US Treasury in the Tornado Cash lawsuit. The judge determined that Tornado Cash could be sanctioned as it exhibited characteristics of an individual, given its founders, developers, and decentralized autonomous organization (DAO) structure.
The blacklisting of Tornado Cash resulted in a ban on US citizens using the service. This move by OFAC highlights the government’s efforts to crack down on illicit activities in the crypto space.
However, the indictment against Semenov and Storm has raised questions regarding the clarity of the charges. Coin Center, a crypto advocacy organization, argues that the allegations lack sufficient details to prove clear violations of the law. They suggest that the co-founders may fall under the category of anonymizing software providers, rather than money transmitters.
Coin Center’s Director of Research, Peter Van Valkenburgh, points out that the activities mentioned in the indictment, such as web hosting and software repository services, are excluded from money transmission under FinCEN’s 2019 guidance.
As the legal proceedings continue, the crypto community will closely monitor the outcome and its potential implications for the industry. The case serves as a reminder of the increasing scrutiny and regulatory measures being imposed on cryptocurrency-related activities.