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North Korea “Used Tornado Cash to Launder $147.5 Million in Stolen Crypto”

Published 19 hours ago
Eddie Mitchell
Published 19 hours ago
Key Takeaways
  • UN sanctions investigations found Tornado Cash was used by North Korea.
  • Two, Tornado Cash founders are awaiting trial in the U.S., one was found guilty in the Netherlands.
  • North Korean cyberattacks on crypto companies have totaled around $3.6 billion since 2017.

The United Nations (UN) Security Council was recently informed that North Korean cybercriminals had laundered millions through the controversial crypto anonymizer, Tornado Cash.

The news arrives as Tornado Cash co-founder and developer, Alexey Pertsev, was found guilty of laundering $1.2 billion and jailed for 64 months in the Netherlands. As fellow co-founders Roman Storm and Roman Semenov await their trial, could the UN’s findings give their case more weight?

Tornado Cash Aids North Korea

As per a report from Reuters , a confidential document from investigators has informed the UN that $147.5 million in stolen cryptocurrencies were laundered through Tornado Cash by North Korea.

According to the report, 97 cyberattacks from North Korea that targeted crypto companies had stolen some $3.6 billion. Of this total, a $147.5 million theft from the HTX crypto exchange was laundered through Tornado Cash in March 2024.

Investigators say that in 2024 so far, they’ve been probing 11 thefts valued at $54.7 million. They found that many were conducted by Democratic People’s Republic of Korea (DPRK) IT workers working abroad.

Tornado Cash was initially sanctioned by the U.S. in 2022 for these exact reasons. Allegedly they had been aiding North Korea’s Lazarus Group by enabling them to launder illicit funds through the mixer.

In 2023, the U.S. charged two Storm and Semenoz with facilitating over $1 billion in money laundering. They have both pleaded not guilty and are awaiting their trial. Meanwhile in Europe, a Netherlands court found the third co-founder and developer, Alexey Pertsev, guilty.

North Korea’s Crypto Gambit

Cryptocurrencies being used to dodge traditional financial systems is a tale as old as Bitcoin itself. But in increasingly polarizing geopolitical tensions, they are being used to skirt economic sanctions.

A Chainalysis podcast  featuring Jessica Peck, Senior Counsel at the U.S. Department of Justice (DOJ), and Chris Wong, Supervisory Special Agent with the FBI, highlighted the complexities of tackling North Korea’s means to generate revenue for military and nuclear programs.

According to Wong, one of the “primary mechanisms” North Koreans use to convert stolen crypto is using over-the-counter (OTC) traders. Which is a peer-to-peer (P2P) method, and is popular in countries facing economic troubles in countries such as Venezuela, or even where crypto trading is “banned” in places like China.

Speaking on Tornado Cash, Peck highlights that sanctions were somewhat effective against it and reduced its liquidity pool at that time, but those figures are trending up again.

Despite sanctions and charges placed against Tornado Cash, Peck admits that they’re “still operating,” and not every one of its users is a criminal. Hong weighs in, questioning the point of sanctioning a mixer that can’t be taken down.

Tornado Cash Trials

With Alexy Pertsev now headed to jail in the Netherlands, the other two co-founders are waiting to hear their fate  in the U.S. The UN’s latest findings could carry a great deal of weight in the upcoming trial.

In addition, the debate also centers around whether or not the Tornado Cash founders held any control over the mixer. Some argue  that the developers cannot be held accountable for the misuse of their product. Just as a car manufacturer isn’t guilty for the illegal uses of the vehicles it produces.

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