Roman Storm, a cofounder of Tornado Cash, was arrested today on charges including conspiracy to commit money laundering. Additionally, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned another cofounder, Roman Semenov, for his alleged role in laundering stolen virtual assets for North Korea. These actions come as part of a broader U.S. government effort to crack down on suspected cybercriminal activities tied to North Korea.

“Even after they knew the Lazarus Group was laundering hundreds of millions of dollars’ worth of stolen virtual currency through their mixing service for the benefit of the Kim regime, Tornado Cash’s founders continued to develop and promote the service and did not take meaningful steps to reduce its use for illicit purposes,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement.

Legal expert Gabriel Shapiro weighed in on the indictment, expressing concern over the claim that the involved parties were running an unregistered money services business (MSB).

Semenov’s addition to OFAC’s Specially Designated Nationals list has led to the blocking of his assets and a prohibition on doing business with U.S. persons. The update also included several ether wallet addresses, linking them to North Korean sanctions regulations.

Tornado Cash, created in 2019, has reportedly been used to hide hundreds of millions of dollars in virtual currency. The Lazarus Group, a state-sponsored hacking group affiliated with North Korea, allegedly utilized Tornado Cash to conceal over $455 million stolen in a March 2022 attack on Axie Infinity’s Ronin network bridge. Additional accusations include laundering more than $96 million from a June 2022 heist on Harmony’s Horizon bridge and at least $7.8 million from an August 2022 Nomad heist. These funds are believed to support North Korea’s unlawful weapons programs.

The crypto community has responded with criticism, expressing concerns over the nature of the sanctions, as Tornado Cash is considered a software tool. The debate centers on whether its use for illicit purposes can be directly attributed to its creators.