May 14, 2024
Latest Cryptocurrency News

Tornado Cash Developer Found Guilty of Money Laundering

Alexey Pertsev, the developer behind the cryptocurrency mixing protocol Tornado Cash, has been convicted of money laundering by Dutch judges at the s-Hertogenbosch Court of Appeal.

On May 14, the court sentenced Pertsev to five years and four months in prison for allegedly laundering $1.2 billion worth of illicit assets through the platform.

Despite Tornado Cash being a noncustodial protocol — meaning it does not hold or control any funds — Pertsev was found guilty. His conviction follows his initial arrest in the Netherlands in August 2022, shortly after Tornado Cash was blacklisted by the U.S. government. Pertsev’s legal team has 14 days to appeal the ruling.

Concerns for Open-Source Developers

The case against Pertsev has raised significant concerns among open-source code developers. The conviction suggests that developers could be held liable for the misuse of their code by criminals.

Pertsev’s indictment argued that he should have been aware of the illicit origins of some transactions on the platform he co-developed.

However, there is no evidence of him actively facilitating any criminal activities beyond contributing to the open-source code.

Moroever, during his previous trial in March, prosecutors contended that Pertsev did not implement sufficient safeguards to prevent illicit money laundering.

Additionally, authorities also allege that high-profile hackers, including North Korea’s Lazarus Group, used Tornado Cash. The Lazarus Group is suspected of laundering over $455 million of the $625 million stolen in the Axie Infinity’s Ronin Bridge hack in March 2022 through Tornado Cash.

Broader Implications for the Crypto Industry

Pertsev’s sentencing comes in the wake of increased scrutiny on crypto mixing services. Recently, authorities also arrested Samourai Wallet CEO Keonne Rodriguez and CTO William Hill. They face charges of conspiracy to commit money laundering and operating an unlicensed money transmitting business.

Furthermore, the U.S. government’s actions against Tornado Cash and similar services highlight a broader regulatory stance against crypto privacy tools. Amanda Tuminelli, legal chief of the DeFi Education Fund, remarked that these measures demonstrate a clear “disdain for privacy.”

As the crypto industry continues to evolve, the legal landscape for open-source developers remains uncertain, with Pertsev’s case potentially setting a critical precedent.

Image by storyset on Freepik

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