Tornado Cash Developer Fails to Mix Himself Out of 64-Month Prison Sentence

Wednesday, 15/05/2024 | 06:05 GMT by Damian Chmiel

A Dutch court has sentenced Alexey Pertsev to 5 years and 4 months in prison.

A year ago, another crypto mixer founder was detained in the United States.

The Oost-Brabant district court in the Netherlands has sentenced Alexey Pertsev, co-developer of the popular cryptocurrency mixing tool Tornado Cash, to 64 months in prison for his role in creating and maintaining the platform.

The court alleges that Tornado Cash enables "criminal activity and terrorism" by concealing the origin, destination and ownership of the crypto transactions.

Tornado Cash Developer Sentenced to 5 Years and 4 Months Behind Bars

Pertsev, along with two other individuals, developed Tornado Cash to offer privacy solutions for the crypto community. However, the court's investigation revealed that the tool allegedly facilitated the laundering of approximately $1.2 billion to $2.2 billion in Ethereum (ETH), derived from various thefts and hacks.

Despite Pertsev's assertion that Tornado Cash was not designed to facilitate criminal activities, the court determined that the tool was actively used for money laundering. The court highlighted that Pertsev and his co-founders were accountable for the operation of Tornado Cash and its "lack of measures to prevent abuse," stating they developed it with full knowledge of its potential for illicit use.

Tornado Cash dev ruled liable for all illicit use, despite no ability to prevent it ‼️

We'll break down both the ruling itself and the craziness of the precedent set here by the case against Alex Pertsev, a developer and co-founder of the @TornadoCash project 🧵 pic.twitter.com/wRycZZGiBk
— Freedom.Tech (@freedomtech) May 14, 2024

A crypto mixer, also known as a cryptocurrency tumbler, is a service that mixes various transactions to obscure the origins and destinations of crypto assets. This process enhances privacy and anonymity for users by breaking the link between the sender and receiver of a transaction.

The court pointed out that approximately $450 million in cryptocurrency, stolen by the North Korean hacking group Lazarus in the "Axie Infinity hack," was funneled through Tornado Cash and laundered, underscoring the tool's "significant value to the criminal underworld."

In addition to the prison sentence, the court decided not to return Pertsev's seized Porsche and roughly €1.9 million in cryptocurrency.

The first issues for Tornado Cash began in 2022 when the platform was blacklisted in the United States.

Here's the list of Tornado Cash resources that were banned

- Tornado Cash @GitHub organization
- personal @GitHub accounts of TC contributors
- all $USDC on Tornado Cash contracts @circlepay
- @infura_io RPC
- @AlchemyPlatform RPC
- https://t.co/SHvgEjTOMV domain @eth_limo
— 🌪️ Tornado.cash 🌪️ (@TornadoCash) August 9, 2022

Separate Case in the US

Roman Storm, another co-founder of Tornado Cash, was arrested in the United States last year, while the third co-founder, Roman Semenov, remains a fugitive and faces money laundering charges.

Finance Magnates reported in August 2023 that Storm had been charged in the US with assisting criminals, including hackers linked to the North Korea-associated Lazarus Group, in laundering over $1 billion in illicit funds. The Federal Bureau of Investigation (FBI) arrested Storm in Washington.

The US Department of Justice charged Semenov with conspiracy to commit money laundering, sanctions violations, and operating an unlicensed money-transmitting business. According to the agency, the executives received complaints and calls from victims of cybercrimes. Still, they deliberately avoided implementing controls to prevent criminals from using the platform to launder illicitly obtained cryptocurrencies.

Separately, the Treasury’s Office of Foreign Assets Control (OFAC) issued a sanctions designation against Semenov, following a similar sanction placed on Tornado Cash last year.