Key takeaways:
- The conviction of crypto mixing protocol creator Tornado Cash’s creator for money laundering might have serious ramifications for others who create open-source software.
- According to an earlier indictment, Pertsev ought to have known that some of the transactions on the platform he co-developed had illegal origins.
The conviction of crypto mixing protocol creator Tornado Cash’s creator, Alexey Pertsev, for money laundering might have serious ramifications for others who create open-source software.
On May 14, Dutch judges at the s-Hertogenbosch Court of Appeal found Pertsev guilty of money laundering. The developer was given a five-year, four-month prison sentence for using the site to illegally launder $1.2 billion in illicit assets.
Despite Tornado Cash being a noncustodial crypto mixing protocol, which means that the funds that flow through it are never retained or controlled by it, the sentence was imposed.
Not long after Tornado Cash was placed on the US government’s “blacklist” in August 2022, the developer was initially imprisoned in the Netherlands and later found guilty despite not having authority over the funds. Pertsev’s attorneys will have fourteen days to file an appeal of the court decision.
According to an earlier indictment, Pertsev ought to have known that some of the transactions on the platform he co-developed had illegal origins.
Apart from his contributions to the crypto mixing protocol’s open-source code, Pertsev does not appear to be actively supporting illicit transactions.
Since the case could establish a precedent for penalizing developers for the ways in which criminals utilize their code, open-source code developers are deeply concerned about it.
Prosecutors contended that the developer failed to erect enough barriers to stop illegal money laundering during Pertsev’s prior trial in March.
Authorities claimed that the criminals employing the protocol included some of the most well-known hackers, including the state-backed Lazarus Group of North Korea.
Suspected to be responsible for the historic $625 million hack on Axie Infinity’s Ronin Bridge in March 2022 is the Lazarus Group.
The US Department of the Treasury’s Office of Foreign Assets Control claims that Lazarus used Tornado Cash, enabling over $7 billion in crypto laundering since its introduction in 2019, to launder over $455 million worth of the stolen funds.
The founders of Samourai Wallet were arrested a few weeks before Pertsev’s conviction. CEO Keonne Rodriguez of the crypto wallet Samourai Wallet and Chief Technology Officer William Hill will be charged with one count each of conspiring to launder money and one count of conspiring to run an unauthorized money laundering business.
