Alexey Pertsev, the developer behind Tornado Cash, has been found guilty of money laundering by a Dutch court. The trial took place following an indictment that accused Pertsev of engaging in a pattern of money laundering between July 9, 2019, and August 10, 2022. The prosecution argued that Pertsev should have had suspicions about the illicit origins of transactions on the Tornado Cash platform. Pertsev was arrested in August 2022 in the Netherlands when Tornado Cash was blacklisted by the U.S. government. The U.S. Treasury had accused Tornado Cash of being a crucial tool for the North Korean hacking group Lazarus, which has been involved in major crypto thefts.
The outcome of Pertsev’s trial could have implications for the pending trials of other Tornado Cash developers, Roman Storm and Roman Semenov. Storm and Semenov are facing allegations of money laundering and sanctions violations in the United States. Storm challenged the charges by submitting a motion to dismiss them, claiming that he did not operate a money laundering business and did not violate the International Emergency Economic Powers Act. His attorneys argued that Tornado Cash is not a custodial mixing service and does not meet the definition of a financial institution.
Storm’s defense also contended that merely developing the code for the project does not equate to operating a money laundering entity. However, the US Department of Justice rejected Storm’s motion, stating that Tornado Cash was announced in 2019 as a mixer and included a website, user interface, smart contracts, and a network of relayers. The DOJ asserted that Storm cannot dismiss the indictment based on his own view of how Tornado Cash operated or his intent. The US Treasury has added Tornado Cash to its Specially Designated Nationals list, effectively banning Americans from using the mixer.
The decision to convict Alexey Pertsev for money laundering has sparked controversy, with some arguing that condemning him is akin to condemning a knife or car manufacturer whose users have behaved illegally. Pertsev’s conviction has raised concerns within the crypto community about the potential legal implications for developers of open-source tools. Roman Storm, another developer involved in Tornado Cash, is scheduled to stand trial in September. Storm has challenged the charges against him, stating that he did not operate a money laundering business and did not violate any laws. Pertsev’s arrest highlighted the risks faced by developers of cryptocurrency projects that are used for illicit purposes.
The development of Tornado Cash, a cryptocurrency mixer, has drawn scrutiny from authorities due to its alleged use by criminal groups for money laundering and illicit activities. The US Treasury has accused Tornado Cash of facilitating transactions for the North Korean hacking group Lazarus, which has been linked to major crypto thefts. Developers like Pertsev, Storm, and Semenov are facing legal challenges related to their involvement in Tornado Cash. The debate over whether developers should be held accountable for the actions of users of their open-source tools continues to be a contentious issue in the crypto community. The outcome of Pertsev’s trial and the pending trials of other developers could set important precedents for the regulation of cryptocurrency projects in the future.
