On August 17, 2023, the U.S. District Court for the Western District of Texas granted summary judgment to the U.S. Department of the Treasury (Treasury) on all of the plaintiffs’ claims in the lawsuit challenging the Department’s Treasury’s Office of Foreign Assets Control’s (OFAC) designation of Tornado Cash, a purportedly decentralized cryptocurrency mixer that runs on Ethereum.  Days later, on August 23, 2023, the U.S. Department of Justice unsealed an indictment charging two of the three cofounders of Tornado Cash with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.  The charges arise from the two cofounders’ alleged creation, operation, and promotion of Tornado Cash, which facilitated more than $1 billion in money laundering transactions involving the Lazarus Group, a sanctioned North Korean cybercrime organization.  Concurrent with the DOJ charges, OFAC designated Roman Semenov, one of the criminally charged cofounders of Tornado Cash.  These latest events come roughly one year after OFAC designated Tornado Cash, about which Crowell issued a comprehensive client alert.

Crowell’s Caroline Brown and Anand Sithian provided commentary on the district court’s ruling and the indictment to Law360 and CoinDesk, respectively.

Links to media coverage:

Law360, Tornado Cash Charges Set Stage For Clash Over ‘Control’

CoinDesk, Tornado Cash Indictments May Prove to Be Just a Localized Storm After All