A panel of judges in the Netherlands has found Alexey Pertsev, one of the developers behind cryptocurrency anonymization tool Tornado Cash, guilty of money laundering.
Over the course of two days in March, the Russian national stood trial on charges that the tool he developed had allowed criminals (including hackers with ties to North Korea) to freely launder $1.2 billion in stolen cryptocurrency. “Tornado Cash management welcomed the bank robbers with open arms,” prosecutors wrote in a March court filing.
Dutch judges on Tuesday sentenced Pertsev to five years and four months in prison, which was the sentence requested by prosecutors in the case.
“With Tornado Cash, the defendant created a shortcut to finance crime and terrorism,” the court said in a sentence, Translated from Dutch. “He chose to look away from the abuse and took no responsibility.”
The purpose of tools like Tornado Cash, known as crypto mixers or tumblers, is to mask the origin and destination of users’ coins. Funds belonging to many parties are pooled, mixed, and spit out into new wallets, at which point it is no longer clear whose cryptocurrency it is. These services are promoted as a way to improve the level of privacy available to cryptocurrency users, but have been easily co-opted for money laundering purposes.
On August 8, 2022, Tornado Cash was sanctioned in the United States, making it illegal for US citizens to use the service. Any product that “indiscriminately facilitates anonymous transactions,” the U.S. Treasury’s Office of Foreign Assets Control wrote, represents a “threat to the national security of the United States.” Two days later, Pertsev was arrested in the Netherlands, where he lived.
Money laundering activity, Dutch prosecutors claim, accounted for more than 30 percent of the funds passing through Tornado Cash between 2019 and 2022. Meanwhile, Pertsev “deliberately looked the other way,” they say, doing “nothing.” to prevent criminal activity. “Pertsev was not blind; “He knew perfectly well what was happening but decided not to intervene,” prosecutors wrote in the file.
Pertsev built his defense on the argument that Tornado Cash, which is still in operation, is under no one’s control (not even his own) as a piece of software running on the Ethereum blockchain, a distributed network of computers. .
Although Pertsev cannot dictate how users interact with Tornado Cash directly through the blockchain, he and the other developers were in de facto control, prosecutors argued, because they operated the web interface through which most were powered. of transactions. While Pertsev added functionality to the web interface that allowed legitimate users to separate their funds from those arriving from known criminal addresses, they characterized the effort as “too little, too late.”
Pertsev’s arrest sparked protests among cryptocurrency and privacy advocates, some of whom proven outside the courtroom on the opening day of the trial. His defenders say It is unfair for an open source software developer to be held responsible for user behavior, and they say the verdict will have a chilling effect on the development of privacy-preserving software.