WASHINGTON (AP) — U.S. government officials on Wednesday started cracking down on the co-founders of the virtual currency mixer Tornado Cash, just days after a federal judge decided that the government had the authority to sanction them.

Treasury's Office of Foreign Assets Control sanctioned Russian national Roman Semenov, one of the three co-founders of Tornado Cash, for allegedly supporting the North Korean hacking organization Lazarus Group, among other things.

Also Wednesday, the Justice Department unsealed an indictment charging Semenov and Tornado Cash co-founder Roman Storm, from Auburn, Washington, with conspiracy to commit money laundering, operating an unlicensed money-transmitting business and other crimes. Storm was arrested in Washington on Wednesday by federal officials.

Semenov is believed to be in Dubai.

Tornado Cash and other mixing services combine various digital assets, including potentially illegally obtained funds along with legitimately obtained funds, so that illegal actors can obscure the origin of the stolen funds.

Tornado Cash was sanctioned in August 2022, accused of laundering billions in virtual currency since its creation in 2019. The Justice Department says Tornado Cash facilitated more than $1 billion in money-laundering transactions, including hundreds of millions for Lazarus Group, whose criminal activities U.S. officials say have helped finance North Korea's nuclear weapons and ballistic missile programs.

Treasury says Tornado Cash systems were used, among other things, to launder more than $96 million drawn from the June 2022 Harmony blockchain bridge theft and August 2022 Nomad crypto firm heist.

Federal prosecutors also charged Semenov and Storm with violating the sanctions against Tornado Cash.

Brian Klein, an attorney at Waymaker LLP, who represents Storm, said "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 his client has been cooperating with the prosecutors' investigation since last year and disputes that he engaged in any criminal conduct.

The penalties and arrest come after U.S. District Judge Robert Pitman decided Aug. 17 that Treasury did not overstep its authority in sanctioning Tornado Cash. A group of crypto investors brought a lawsuit against Treasury in September 2022, alleging that Treasury overstepped its authority in sanctioning Tornado Cash.

The sanctions faced strong pushback from the crypto industry, which argued that the sanctions open the door to limiting Americans' usage of privacy software.

A third co-founder of Tornado Cash, Alexey Pertsev, was arrested in August 2022 on money laundering charges in the Netherlands.

Legal representatives for Semenov and Pertsev were not immediately available for comment.

Last May, the U.S. sanctioned North Korean digital currency mixing firm Blender.io, which the country allegedly uses to launder stolen virtual currency and support cyber crimes.

Blender is accused of helping Lazarus Group to carry out a $620 million digital currency heist in March, the biggest of its kind to date.

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Associated Press reporter Larry Neumeister in New York and Frank Bajak in Boston contributed to this report.