Tornado Cash developers charged, one arrested

The developers behind Tornado Cash, a privacy tool that obfuscates the origin of funds transactions, were charged on Wednesday by the Department of Justice for helping hackers launder more than $1 billion.

Why it matters: While originally conceived as a privacy tool, the mixer has been used to help launder billions in increasingly high-profile heists before getting blacklisted by the U.S. government.

What's happening: Roman Storm and Roman Semenov face charges of sanctions violations as well money laundering; Storm has already been arrested by the DoJ.

• Alexey Pertsev, a Tornado Cash developer, was arrested last year in the Netherlands. He was released this year, currently awaiting trial.

Of note: The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) also sanctioned Semenov, one of three co-founders of the now blacklisted Tornado Cash, for his role in providing support to the mixer and to the Lazarus Group.

Flashback: Tornado Cash was effectively banned in Aug. 2022. It later issued guidance for users to lawfully withdraw their funds.

Details: They are each charged with one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Economic Emergency Powers Act, which each carry a maximum sentence of 20 years in prison, according to the DoJ.

• Conspiracy to operate an unlicensed money transmitting business carries a maximum sentence of five years in prison.