TornadoCash is a well-known coin mixer service platform in the field of cryptocurrency. That is, users can transfer crypto assets, especially Bitcoin, to the Tornado Cash platform. The platform will transfer the assets multiple times and then transfer them out through new addresses. This method helps improve the privacy security of Bitcoin, but it is still not thorough enough. After all, the entire Bitcoin block can be traced, but if all users’ assets are mixed together, it will not be able to be accurately distinguished.
The developer of the platform is Russian citizen Alexey Pertsev. Although Tornado Cash is open source software, the Dutch court found during the trial that Alexey Pertsev and his team members still have control, so the software should not be exempted from all liability by being open source.
The incident occurred on August 8, 2022:
At that time, the United States announced sanctions on Tornado Cash, making it illegal for any American citizen or entity to use the platform. The reason for the sanctions is that the United States discovered that multiple hackers and fraud groups laundered illegally obtained funds through the Tornado platform to avoid tracking by law enforcement agencies.
Alexey Pertsev was arrested in the Netherlands two days later and has been detained by Dutch law enforcement agencies since then awaiting trial. The Dutch court recently announced that Alexey Pertsev had laundered more than 1.2 billion US dollars and was sentenced to 64 months in prison.
Knowing that money laundering was occurring but failing to intervene:
Dutch prosecutors claimed that Alexey Pertsev was well aware of the problem of laundering illegal funds on the platform. Statistics show that from 2019 to 2022, the platform accounted for more than 30% of money laundering activities, but Alexey Pertsev never intervened.
To launder funds through a coin mixer, you need to pay a lot of handling fees. It is true that most users mix coins based on privacy concerns. However, there are also a considerable number of hackers who also launder money in this way. The typical example is the notorious Lazarus Group.
The representative lawyer stated that Tornado Cash runs on the Ethereum blockchain, and the software itself is open source. Alexey Pertsev cannot decide how users interact with the platform through the Ethereum blockchain, and therefore should not bear any liability caused by users’ illegal behavior.
However, prosecutors completely rejected this statement. The investigation showed that Alexey Pertsev and his team members had control, including adding functions to the web interface that allowed legitimate users to separate their funds from hacker addresses that had been flagged. However, prosecutors believed that Alexey Pertsev and his team acted too late.
A large amount of money had been laundered through the platform before the intervention, so prosecutors believe that this has nothing to do with the responsibility of open source software developers, but to Alexey Pertsev's personal choice, even though he knew that there was an inflow of illegal funds but still did not take active action to intervene.
In the end, Dutch prosecutors asked the court to sentence Alexey Pertsev to 64 months in prison. The court agreed to this request after a trial, which is the time Alexey Pertsev ultimately needed to be jailed.
In addition, the Dutch court also issued a statement in response to this matter: Alexey Pertsev did not care about laws and regulations under the guise of privacy, and Tornado Cash became a legal tool that was unintentionally abused by criminals, but was suitable for criminal purposes.
By the way, there is an episode in this matter. After TornadoCash was sanctioned, GitHub banned the project and also banned all developers who had submitted code to the project. Isn't this very ridiculous?