The cryptocurrency sector and crypto entrepreneurs have often come under legal scrutiny in recent years. Former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison on fraud charges in March, after Binance founder Changpeng received a four-month sentence earlier this month for the exchange’s anti-money laundering activities. Now, Alexey Pertsev, the developer of the controversial crypto mixer Tornado Cash, has reportedly been found guilty of laundering illegal funds through the platform.
According to a report by Crypto Potato, Pertsev, a resident of the Netherlands, now faces 64 months in prison. His lawyers have fourteen days to appeal the verdict. Pertsev, a Russian national, is accused of laundering a total of $1.2 billion (approximately 18,370 crore rupees).
Crypto mixers like Tordano Cash allow people to deposit crypto tokens into a common pool of cryptocurrencies. From this shared pool, these escrow crypto tokens can be linked into crypto wallets shrouded in secrecy.
Since its launch in 2019, Tornado Cash has become popular among crypto hackers, scammers and thieves. In several cases, crypto-criminals have used Tornado Cash to move illicit funds without leaving a trace for the authorities.
In March of this year, during Pertsev’s trial, prosecutors blamed the developer for not doing enough to limit crypto criminals from exploiting the Tornado Cash platform. Responding to those claims, Pertsev reportedly argued that users who come to the platform intentionally want to remain anonymous and that he should not be penalized for others using the platform he developed.
Many in the crypto community spoke in Pertsev’s defense. One of them is Raphaël Bloch, co-founder of the publication ‘The Big Whale’. In a tweet published on May 14, Bloch said: “This decision is very dangerous because Pertsev only developed an open source tool. Condemning it is like condemning the manufacturer of a knife or a car whose users would behave in the wrong way.”
Development of Tornado Cash Alexey Pertsev was found guilty of money laundering by a Dutch court
This decision is very dangerous because Pertsev only developed an open source tool
Condemning it is like condemning the manufacturer of a knife or a car whose users would misbehave
— Raphaël Bloch :whale: (@Raph_Bloch) May 14, 2024
Crypto influencer Ryan Sean Adams, who has over 240,000 followers on X, called the Perts ruling the death of privacy in the European Union (EU).
This is a sad day for the Netherlands.
This is a sad day for the fundamental principles of open societies and Western liberal democracies.
Today, a Dutch court sentenced crypto privacy developer Alexey Pertsev to 5 years in prison for developing an open source tool that…
— RYAN SΞAN ADAMS – rsa.eth :unicorn_face: (@RyanSAdams) May 14, 2024
Many reacted to the development, calling it an example of centralized systems undermining the financial independence and privacy offered by the crypto sector.
The whole Tornado Cash ruling is completely insane and will overturn the legality of building any privacy service.:thread:
1. Open source developers who build tools without custody can be held liable for criminal activity in the event of a crime. actors cannot be stopped or deanonymized:point_down: pic.twitter.com/Bjw9ry5zkM
— L0la L33tz (@L0laL33tz) May 14, 2024
The whole Tornado Cash ruling is completely insane and will overturn the legality of building any privacy service.:thread:
1. Open source developers who build tools without custody can be held liable for criminal activity in the event of a crime. actors cannot be stopped or deanonymized:point_down: pic.twitter.com/Bjw9ry5zkM
— L0la L33tz (@L0laL33tz) May 14, 2024
A Dutch court found Tornado Cash developer Alexey Pertsev guilty of money laundering.
Roman Storm will face money laundering and sanctions violations in the US in September.
Either you participate in AML/KYC regulation or you go to jail.
This is a real… pic.twitter.com/igKCO5GPcP
— Michelle Weekley (@michelleweekley) May 14, 2024
In 2022, Tornado Cash attracted the attention of US authorities. The privacy mixer has reportedly been accused of laundering illegal funds worth $7 billion (roughly Rs. 57,911 crore). The FBI even suspected that North Korean hackers used Tornado Cash to make off with $455 million (roughly Rs. 3,763 crore) worth of stolen cryptocurrencies.
The US Office of Foreign Assets Control (OFAC) imposed sanctions against Tornado Cash in August 2022.
