Tornado Cash developer sentenced to 64 months for money laundering

Alexey Pertsev has been sentenced to 64 months in prison over his involvement in developing the Ethereum privacy tool Tornado Cash. 

On May 14, a trio of Dutch judges found the Tornado Cash developer guilty of aiding $2.2 billion in money laundering through the Ethereum-based crypto mixer. 

Lawyers defending Pertsev had argued that it was unfair to hold developers liable for building smart contract protocols accessible to anyone, a stand that crypto industry stakeholders have long since echoed. 

Prosecutors in the Netherlands countered by insisting that the Tornado Cash contributor failed to stop the platform from criminal elements such as North Korea’s cybercriminal group Lazarus. 

The three-judge panel sided with prosecutors, asserting that Tornado Cash was built intentionally for illicit activity. One judge also said that technological ideology does not exempt individuals from the scope of the law. 

Pertsev was first arrested in the Netherlands in August 2022, days after the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash over money laundering and illicit finance allegations. A chief case cited by OFAC was the $600 million attack on Axis Infinity’s Ronin Bridge, which is coincidentally crypto’s largest hack to date. Following eight months in jail, he was released and placed under house arrest. 

The judges ruled that his initial eight-month incarceration would be removed from his 64-month sentence. Pertsev will now serve four years and six months in prison, and his lawyers will have 14 days to appeal the verdict.

Tornado Cash precedent for crypto mixer cases

Although other Tornado Cash developers and co-founders are embroiled in litigation within other jurisdictions, Pertsev’s case could set a precedent for how global judiciaries approach decentralized privacy protocols and cases involving crypto mixers. 

Tornado Cash co-founders Roman Storm and Roman Semenov are accused of violations in the U.S., with Storm’s court case still ongoing. 

Authorities have also directed investigations to platforms like Samourai Wallet as the Department of Justice (DOJ) and its Financial Crimes Enforcement Network (FinCEN) clampdown on crypto mixers. 

Due to a lack of concise defi and digital asset regulations in the U.S., the case against crypto mixers and privacy protocols is particularly contentious, as lawmakers and enforcement agencies are at odds regarding policy interpretation. 

As reported this week, a bipartisan duo of Senators questioned FinCEN over its crypto mixer lawsuits built on the back of classifying such entities as illegal money transmitters. 

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