Tornado Cash Developer Sentenced to 64 Months in Prison on Charges of Laundering $1.2 Billion: Report

Alexey Pertsev’s lawyers have fourteen days to appeal the verdict.

Written by Radhika Parashar, Edited by Manas Mitul | Updated: 15 May 2024 16:05 IST

Tornado Cash Developer Sentenced to 64 Months in Prison on Charges of Laundering $1.2 Billion: Report

Photo Credit: Tornado Cash

Tornado Cash was co-founded by Pertsev and launched in 2019

Highlights

Tornado Cash has become popular among crypto criminals
Crypto criminals use the platform for secretly moving illicit funds
Tornado Cash developer faces jailtime of over five years

The cryptocurrency sector and crypto entrepreneurs have often come under legal scrutiny in recent years. Former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison in March over charges of fraud, followed by Binance founder Changpeng getting a four-month sentence earlier this month over the exchange's anti-money laundering activities. Now, Alexey Pertsev, the developer of controversial crypto mixer Tornado Cash, has reportedly been found guilty of laundering unlawful funds via the platform.

According to a report from Crypto Potato, Pertsev, a resident of the Netherlands, now faces 64 months of jailtime. His lawyers have fourteen days to appeal the verdict. Pertsev, a Russian national, has been accused of laundering a total of $1.2 billion (roughly Rs. 18,370 crore).

Crypto mixers like Tordano Cash let people deposit crypto tokens into a common pool of cryptocurrencies. From this common pool, these deposited crypto tokens can be wired into crypto wallets shrouded in secrecy.

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Since its launch in 2019, Tornado Cash has found popularity among crypto hackers, scammers, and thieves. In several instances, crypto criminals have used Tornado Cash to move illicit funds around without leaving a trail for authorities to trace.

In March this year, during Pertsev's trial, prosecutors had blamed the developer for not doing enough to restrict crypto criminals from exploiting the Tornado Cash platform. Retaliating to these claims, Pertsev had reportedly argued that users coming to the platform intentionally wanted to remain anonymous and that he should not be punished for others using a platform he developed.

Many from the crypto community have spoken in Pertsev's defence. One of them is Raphaël Bloch, co-founder of ‘The Big Whale' publication. In a tweet published on May 14, Bloch said, “This decision is very dangerous because Pertsev only developed an open-source tool. Condemning him is like condemning a knife or car manufacturer whose users would have behaved in a wrong way.”

BWA Calls for Teamwork in Preventing Money Laundering via Crypto: Details

Tornado Cash dev Alexey Pertsev found guilty of money laundering by Dutch court

This decision is very dangerous because Pertsev only developed an open source tool

Condemning him is like condemning a knife or car manufacturer whose users would have behaved in a wrong way
— Raphaël Bloch :whale: (@Raph_Bloch) May 14, 2024

Crypto influencer Ryan Sean Adams, who has over 240,000 followers on X, called Pertsev's sentencing the death of privacy in the European Union (EU).

This is a sad day for the Netherlands.

It's a sad day for the founding principles of open societies and western liberal democracies.

Today crypto privacy developer Alexey Pertsev was sentenced to 5 years in prison by Netherlands court for developing an open source tool that…
— RYAN SΞAN ADAMS - rsa.eth :unicorn_face: (@RyanSAdams) May 14, 2024

Many have reacted to the development, calling it an example of centralised systems cracking down on the financial independence and privacy that the crypto sector offers.

The entire Tornado Cash verdict is completely insane and will turn the legality of building any privacy service on its head.:thread:

1.Open-source devs building non-custodial tools can be held responsible for criminal activity when crim. actors cannot be stopped or deanonymized:point_down: pic.twitter.com/Bjw9ry5zkM
— L0la L33tz (@L0laL33tz) May 14, 2024

A Dutch court has found Tornado Cash developer Alexey Pertsev guilty of money laundering.

Roman Storm will face allegations of money laundering and sanctions violations in the US in September.

You either participate in AML/KYC regulation or you go to jail.

This is the real… pic.twitter.com/igKCO5GPcP
— Michelle Weekley (@michelleweekley) May 14, 2024

In 2022, Tornado Cash had caught the attention of US authorities. The privacy mixer was reportedly accused of laundering illegal funds worth $7 billion (roughly Rs. 57,911 crore). The FBI even suspected that North Korean hackers had used Tornado Cash to run off with stolen cryptocurrencies worth $455 million (roughly Rs. 3,763 crore).

The US Office of Foreign Assets Control (OFAC) imposed sanctions against Tornado Cash in August 2022.

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Further reading: Cryptocurrency, Tornado Cash, Crypto Mixer, Crypto Privacy

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More