Hundreds of millions of dollars were laundered for a North Korean hacking group, Justice Department says

Federal authorities on Wednesday charged two men with running a massive money-laundering scheme that allegedly handled more than $1 billion in illegal transactions, including moving hundreds of millions of dollars worth of cryptocurrency for North Korean hackers linked to that country’s government.

The charges filed in Manhattan federal court accuse Roman Storm of Washington state and his business partner Roman Semenov, a Russian citizen, of laundering money and violating sanctions through their business Tornado Cash, a cryptocurrency “mixer” that allegedly moved money for the Lazarus Group, a sanctioned North Korean cybercrime organization.

Authorities say the two men publicized their business as a privacy-focused financial service, when in fact they were knowingly working to help criminals hide their money.

Federal investigators say such mixing services are increasingly popular among many cybercriminals as a means of hiding and moving illegal profits. But FBI Director Christopher A. Wray said in a written statement that such criminals “are neither untraceable nor anonymous. You can’t hide from us behind a keyboard — whether you’re a hacker or a facilitator.”

Brian Klein, a lawyer for Storm, said there is “a lot more to this story that will come out at trial.”

“We are incredibly disappointed that the prosecutors chose to charge Mr. Storm because he helped develop software, and they did so based on a novel legal theory with dangerous implications for all software developers,” Klein said in a written statement. “Mr. Storm has been cooperating with the prosecutors’ investigation since last year and disputes that he engaged in any criminal conduct.”

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In recent years, the Justice Department 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 can involve vast sums of money.

“This is just a new way of cleaning money,” said James Smith, the head of the FBI’s New York office. “It’s harder to trace, but we’re getting smarter every day to trace the currency and expose some of these systems that criminals are using.”

Storm and Semenov 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 they create a version of the service that would adhere to federal anti-money-laundering and know-your-customer rules, the investors at the venture capital fund “dismissed the idea,” the indictment says. One of them allegedly wrote “it would be unlikely that as a fund we’d use a ‘compliant mixer.’”

Authorities allege that Storm and Semenov knowingly allowed the Lazarus Group to launder money on behalf of the North Korean government in the spring of 2022. Storm has been arrested; Semenov remains at large, officials said.

The pairwere charged with conspiracy to commit money laundering, conspiracy to violate U.S. sanctions and conspiracy to operate an unlicensed money transmitting business. If convicted on the most serious charge, they face up to 20 years in prison.